The growth of the Bulgarian economy will weaken over the next two years against the background of the expected decrease in exports and domestic consumption. This is clear from the second Economic Review for the year, prepared by the Bulgarian National Bank (BNB). “We forecast the real GDP growth rate of Bulgaria in 2019 to reach 3.7%, accelerating compared to 2018. (…) For the period 2020-2021, we expect real GDP growth to slow slightly compared to 2019. and reach 3.4% in 2021, “it said. According to the BNB, the contribution of domestic demand to economic growth will weaken this year compared to the previous year, with expectations for weaker expansion of private consumption.
As for the further slowdown in growth over the next two years, the reason is not only the forecast for limited domestic demand but also the weakening of exports compared to 2019. The BNB said that the forecast for GDP growth in 2019 is higher than the economic outlook from the end of the previous year. For the next two years, however, the central bank lowers its growth expectations. As for the expected decrease in exports, the document outlines several factors that will lead to it. Protectionist policies, particularly those of the US and China, affecting world trade and slowing global growth, are fundamental. “The main factors we expect to influence the external demand for Bulgarian goods and services are related to the negative effects of protectionist measures in world trade and the resulting slowdown in trade growth and industrial production globally, and in particular in the countries of the euro area, which are Bulgaria’s main trading partners, “said the review.
“At the same time, the deteriorating economic situation in Turkey, as well as the increased uncertainty surrounding the UK’s exit from the EU, will continue to be risk factors with possible negative effects on external demand for goods and services from Bulgaria,” he added. BNB officials say they expect growth in demand for Bulgarian goods and services to slow down this year. “With the depletion of Turkey’s negative contribution, we forecast the growth of foreign demand for Bulgarian goods and services to accelerate in 2020-2021,” the institution added. “The risks to the macroeconomic outlook tend to underperform real GDP growth and stem mainly from the external environment, where there are risks of a weaker than the projected increase in demand for Bulgarian goods and services,” a summary of the review.