Page 45 - Central & Southeast Outlook 2020

Unemployment rate (avg, %) 9.2 7.6 6.2 5.2 4.3 4.8 5.3
Nominal industrial wages (% yoy) 9.2 7.2 11.3 7.1 9.8 7.2 7
Producer prices (avg, % yoy) -1.9 -3.1 4.8 4.1 2.9 3 3
Consumer prices (avg, % yoy) -0.1 -0.8 2.1 2.8 2.9 3.1 3.7
Consumer prices (eop, % yoy) -0.4 0.1 2.8 2.7 2.7 3 3.9
General budget balance (% of GDP) -2.8 1.6 0.9 0.1 -0.5 -0.5 -1
Public debt (% of GDP) 25.6 29.1 25.1 22.3 20.7 22 24
Current account balance (% of GDP) 0.1 3.2 3.5 5.4 6.3 3.1 2.5
Official FX reserves (EUR bn) 20.4 23.9 23.6 25.1 23.8 23 22
Gross foreign debt (% of GDP) 74.1 71.3 65.4 59.3 57 54.5 51.7
EUR/BGN (avg) 1.96 1.96 1.96 1.96 1.96 1.96 1.96
USD/BGN (avg) 1.76 1.77 1.73 1.66 1.73 1.73 1.67 Source: National sources, RBI/Raiffeisen RESEARCH
Bulgaria’s macroeconomic prospects for 2020 are positive, with international institutions projecting economic growth above 3%. As usual, the growth will be backed by private consumption. Investment should also contribute to GDP expansion mainly thanks to the absorption of EU funds, which accelerated towards the end of the 2014-2020 funding period.
According to the European Commission, GDP will grow by 3% in 2020, slowing from the 3.6% expansion projected for 2019. Domestic demand is expected to continue losing some growth momentum, but should remain the main growth driver.
The European Bank for Reconstruction and Development (EBRD) also expects that Bulgaria’s economy will slow its growth to 3% in 2020. The International Monetary Fund (IMF) was slightly more optimistic, setting its 2020 projection for GDP growth at 3.2%. As usual, the government in Sofia has the most optimistic projection, expecting economic growth of 3.3% in 2020.
Bulgaria’s inflation is expected to slow down in 2020 compared to 2019, but it still could jeopardise the country’s hopes of joining the Exchange Rate Mechanism (ERM2), according to Raiffeisen Research. To meet the Maastricht criteria, Bulgaria’s inflation should be no more than 1.5% above the inflation rate of the three EU member states with the lowest inflation. According to the IMF, consumer prices will accelerate 2.2% in 2020 from an estimated 2.5% in 2019. The government has projected 2020 inflation at 2.1%.
45​ CESE Outlook 2020​ ​ ​www.intellinews.com