UniCredit Slashes Bulgaria's 2012 Growth Forecast

The largest Italian bank UniCredit SpA has cut almost in half Bulgaria's growth forecast for 2012 in its Q4 2011 economic forecast, its Bulgarian subsidiary UniCredit Bulbank announced.

Thus, UniCredit expects that Bulgaria's GDP will expand by 1.5% in 2012, down from a previous forecast of 2.6%.

UniCredit, which is a leader on the Bulgarian banking services market, also predicts a final 2011 GDP growth figure for Bulgaria of 2%, down from the estimate of 2.6% the bank made in March.

UniCredit has emphasized the decline in Bulgaria's FDI to EUR 159 M in the third quarter as one of the reason for the forecast downgrade.

"The challenges facing Bulgaria's economic recovery include contraction of external demand combined with a gradual decrease of corporate-sector debt and a slow recovery in the real estate and labor markets," UniCredit said.

"Bulgaria will avoid a second recession because the public-sector balance and the household sector remain strong," the bank added.

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