THE AUTUMN FORECAST OF THE EUROPEAN COMMISSION ACCORDS WITH THE MINISTRY OF FINANCE ESTIMATES FOR THE DEVELOPMENT OF THE BULGARIAN ECONOMY
05.11.2013
The Bulgarian economy will grow by 1.5% in 2014, the main driver thereof being domestic demand - increase of household consumption and private investment, the published today EC Autumn Forecast shows. The EC forecast estimates Bulgarian GDP at BGN 80.2 billion for 2013 and BGN 82.9 billion for 2014 at current prices, which is by more than BGN 1 billion above the MoF forecast. The analysis indicates a number of internal factors improving the economy in the second half of the year such as the increase of retail trade in July and August and the buoyance of the purchasing power of households. Like the MoF EC expects real GDP growth in 2013 to reach 0.5%, which remains well below the estimated potential growth rate of the economy, but the growth momentum towards the end of 2013 is forecast to entail a positive carry-over effect for next year. The Commission forecast coincides with the MoF estimates that the recent stabilisation of the labour market is sustained over the coming years, supporting household confidence and consumption. The gradual recovery in private investment is supported by the strong financial sector. Risks to the macroeconomic forecast are estimated as broadly balanced.
The budget deficit on an accrual basis is 2% in 2013, coinciding with the MoF estimates for the period. This is due to a combination of weak economic growth and a fiscal stimulus for the economy (which according to the EC is below its potential) implemented in 2013, following three years of fiscal consolidation. Additional spending is mainly for social expenditure, investments and various current expenditure items.
The present forecast was finalised before the submission of the 2014 budget to parliament and thus does not reflect any new fiscal measures of the Bulgarian Government for 2014-15. Therefore the EC estimate is that general government fiscal deficit is set to remain broadly at the 2013 level, at 2% of GDP in 2014 and 1.8% in 2015.
Comparison between the main macroeconomic indicators of the EC Autumn Forecast and of the 2014 draft state budget of the MoF
|
|
Reported |
MoF |
EC |
MoF |
EC |
|
INDICATORS |
2012 |
2013 |
2014 |
||
|
GDP, nominal growth, % |
3.0 |
1.7 |
3.4 |
3.4 |
3.4 |
|
GDP, real growth, % |
0.8 |
0.6 |
0.5 |
1.8 |
1.5 |
|
Private Consumption |
2.6 |
0.2 |
-0.3 |
2.1 |
1.3 |
|
Gross fixed capital formation |
0.8 |
-0.4 |
2.1 |
1.7 |
2.4 |
|
Exports (goods and services) |
-0.4 |
6.8 |
4.9 |
7.2 |
3.4 |
|
Imports (goods and services) |
3.7 |
4.4 |
4.1 |
7.1 |
3.7 |
|
GDP deflator, % |
2.2 |
1.1 |
2.9 |
1.5 |
1.9 |
|
Current account, % of GDP |
-1.3 |
0.6 |
0.3 |
-0.2 |
0 |
|
Harmonised index of consumer prices, % |
2.4 |
0.6 |
0.5 |
1.8 |
1.4 |
|
Unemployment, % |
12.3 |
12.9 |
12.9 |
12.6 |
12.4 |
|
Employment |
-2.5 |
0.1 |
-1 |
0.5 |
0.2 |
According to the forecast published GDP in annual terms is expected to remain unchanged in the EU and contract by ½% in the euro area in 2013. Next year, economic activity is projected to expand by 1½% in the EU and 1% in the euro area being driven mainly by domestic demand. In the forecasted period the correction of the accumulated macroeconomic imbalances will continue. According to the report the main risks to the European economy relate to the external environment, while the already implemented structural reforms in different Member States are expected to give positive results.