Economic growth to speed up but won't exceed 3%

Economic growth in our country will speed up in Q2 2011 and will reach some 2.5%-3% for the year, shows a report of the Centre for Economic Development (CED) on Bulgaria’s economy - April 2011, presented yesterday. “For Q1 2011 we expect a slow growth on an annual basis (about 0.5% to 1%), fuelled by industry and the export of investments,” said CED’s Executive Director Georgi Prohasky.

“The crisis in our country hit rock bottom in Q4 2009 when the overall economic downturn reached 5.5% for the year. 2010 marked a recovery but it was weak and unstable and for the entire year Bulgaria’s GDP growth reached only 0.2%,” said the economist.

The construction sector suffered most, having in mind that in 2008, the sector enjoyed growth rates of 10-14% and was the engine of the economy. In 2009, the value added in the branch fell by 11.7%. Construction will again report negative growth for Q1 2011, reads the report. Nevertheless, Prohasky said he expected a slight recovery in the second quarter of the year.

The industries are doing better with a reported growth of over 10% in January-March, which will continue to increase. The financial sector is the only one which was not affected by the crisis, according to CED’s Executive Director.

The crisis is still on the agenda when it comes to trade, hotel services, transport, communications, the State government, education and healthcare.

The main factor for the slow economic growth is the shrank consumption in which Bulgaria differs from the other European countries. Another factor is foreign investment. The inflow of foreign direct investment in 2010 decreased by half to €1.6 bn, compared to the previous year.

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