Bulgaria's Economic Outlook Brightens: EC Forecasts Growth and Declining Inflation

Amidst global economic uncertainties, the European Commission offers a cautiously optimistic outlook for Bulgaria, forecasting growth in the country's economy alongside a decrease in inflation. In its winter economic forecast, the EC projects a 2% growth rate for Bulgaria in 2023, highlighting the resilience of the nation's economic activity despite facing various challenges.

The report underscores the impact of weaker demand in foreign markets, coupled with higher interest rates in the Eurozone, as factors influencing Bulgaria's economic landscape. Additionally, persistent pressure due to high prices has posed challenges, yet the forecast remains optimistic about Bulgaria's economic trajectory.

Looking ahead, the EC anticipates further growth, with Bulgaria's real gross domestic product expected to increase by 1.9% in 2024 and by 2.5% in 2025. Notably, domestic consumption is poised to emerge as a key driver of economic expansion, signaling confidence in the strength of Bulgaria's internal market.

Inflation, a significant concern for policymakers and consumers alike, is projected to decline in Bulgaria. The EC forecasts a decrease to 3.4% in 2023, with further moderation expected in 2025, with a growth rate of 2.9%. This represents a notable shift from the previous year, where Bulgaria experienced a substantial increase in prices, with inflation reaching 8.6%.

Despite the challenges posed by inflation, Bulgaria's economic landscape exhibits signs of resilience and growth. Private consumption, a vital component of economic activity, witnessed an uptick, particularly in the first half of 2023. Factors such as a robust labor market, increased consumer confidence, lower inflation rates, and active credit activity have contributed to this positive trend, underlining the underlying strength of Bulgaria's economy.

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