Bulgaria’s economy will continue to grow at a moderate pace in 2020 and 2021, but it will be marked by a significant slowdown. The main reason will be the weakening internal consumption, which is the main engine of the economy, and investment will not offset this process.
This is stated in the European Commission’s winter forecast for the European Union economy, the euro area and the individual Member States. It is preliminary and is the first after Brexit and since the future of the relations with the UK is unclear expectations for 2021 are only hypothetical. They are based on the assumption that the trade status quo will continue, but so far it seems most likely will not happen. There are also risks from the state of the US economy, the phase of the US-China trade conflict, and the effect of the 2009 Coronavirus epidemic in China.
With these reservations, the European Commission reports that in its view last year the Bulgarian economy accelerated to 3.7% GDP growth from 3.1% in 2018. But this year, the pace will slow to 2.9%
“Real GDP growth is expected to slow significantly to 2.9% in 2020 and 3.1% in 2021 due to weaker domestic demand growth. Although private consumption is forecast to remain the key growth driver, its contribution to economic expansion is set to decline on the back of lower employment growth. Investment is unlikely to compensate for the slower consumption growth in 2020 and is set to pick up only slightly in 2021, along with somewhat stronger export growth. An upward domestic risk to the forecast stems from a recent recovery in consumer sentiment that could result in better-than-expected private consumption.” The European Commission said in a statement.