11.11.2021

THE EC FORECASTS GDP GROWTH FOR BULGARIA BY 3.8% IN 2021

The EU economy is recovering from the recession caused by the pandemic faster than expected. As vaccination campaigns progressed and restrictions were gradually lifted, growth resumed in the spring and continued unabated in the summer, thanks to the reopening of the economy, the EC said.

Over the forecast period, the EU economy is expected to continue to grow despite the growing challenges and to achieve growth rates of 5%, 4.3% and 2.5% in 2021, 2022 and 2023 respectively. The forecast depends largely on two factors: the development of the COVID-19 pandemic and the pace at which supply adapts to the rapid recovery in demand after the reopening of the economy.

Regarding Bulgaria, the forecast is for an increase in real GDP by 3.8% in 2021, by 4.1% in 2022 and 3.5% in 2023.

EU labor markets have improved significantly thanks to easing restrictions on consumer-oriented activities and reducing the unemployment rate. Unemployment in the EU is expected to fall from 7.1% this year to 6.7% and 6.5% in 2022 and 2023, respectively. In Bulgaria, it is expected to be 5.1%, 4.6% and 4.4% over the three years.

Better growth prospects point to lower deficits in 2021 than expected in the spring.

Temporary price pressures worldwide are leading to inflation, the highest level in ten years. This sharp rise in inflation is mainly due to the sharp rise in energy prices, but also appears to be linked to a wide range of economic adjustments since the pandemic, suggesting that the current high levels are largely temporary. In Bulgaria, inflation is expected to reach 2.4% in 2021, 2.9% in 2022, and then decrease to 1.8% in 2023.

Although the impact of the pandemic on economic activity has diminished significantly, COVID-19 has not yet been defeated and recovery depends to a large extent on the development of the disease both inside and outside the EU. Uncertainty and risks around growth prospects remain very high.