Bulgarian Finance Ministry Increases 2014 GDP Growth Forecast to 2.1%Finance | April 4, 2014, Friday // 14:18| views
Bulgaria's Finance Minister Petar Chobanov, photo by BGNES
Bulgaria's Finance Ministry has improved its 2014 GDP growth forecast.
Citing improved forecasts of the European Commission (EC) and the International Monetary Fund (IMF) about the development of the European and the global economy, the Finance Ministry has grown more optimistic about Bulgaria's economic development.
Bulgaria's Finance Ministry now expects economic growth to reach 2.1% in 2014, up from a previous GDP growth forecast of 1.8%, according to investor.bg.
The GDP growth is to accelerate to 2.6-3.4% in the period 2015-2017.
The more optimistic forecast is attributed to expectations that domestic demand will increase thanks to an increase in consumer confidence, labor market recovery and an increase in household income.
The IMF forecast about Bulgaria's 2014 GDP growth amounts to around 1.6%.
The EC also improved its 2014 GDP growth forecast for Bulgaria to 1.7%, up from a rate of 1.5% in November 2013.
The European Bank for Reconstruction and Development (EBRD) predicts a GDP growth of 2% in 2014 for Bulgaria.
The Finance Ministry sees investments as another factor which is expected to set the economy in motion.
Finance Minister Petar Chobanov predicts a growth in investments by 3% due to the capital spending of the government.
The Finance Ministry expects foreign direct investment (FDI) to stabilize at a rate of slightly below 3% of the GDP. If that rate is achieved, it will suffice to cover the deficit on the current account of the balance payments.
The Finance Ministry vows to keep working on reducing the budget deficit.
The budget deficit is to drop to 0.9% of the GDP by 2017.
The forecasts of a budget deficit of 1.5% in 2015 and a budget deficit of 1.1% in 2016 remain unchanged.
According to Petar Chobanov, the budget deficit in end-February 2014 was lower than in February 2013.
The Finance Ministry expects unemployment to register a slight decrease to 12.8%.
In February 2014, the unemployment rate increased to 13.1%.
The Finance Ministry expects that the unemployment rate will drop to 10.9% by 2017.
The improved outlook is explained with the expectations for a gradual acceleration in employment recovery combined with an increased labour-market demand and increased economic activity.
In 2014, the inflation rate is to remain comparatively low under the impact of the anticipated favorable situation on international markets for raw materials.
In 2015, the inflation rate is to accelerate to 2.4%, after which it is to slow down to 1.7-1.8% in the period 2016-2017.
By end-February 2014, the deflation rate in Bulgaria reached 2.2% on an annual basis after eight consecutive monthly decreases in the consumer price index.
Petar Chobanov has assured that the deflationary trend from the beginning of the year is expected to be dealt with.