UniCredit quarterly analysis forecasts low inflation and a 3.3% economic growth in Bulgaria next year

Bulgaria’s economic growth will accelerate from 2.8% this year to 3.3% in 2012 and inflation will be low, showed a quarterly analysis of UniCredit for Central and Eastern Europe. Economists say that among the reasons for this will be the combination of slow recovery of domestic demand and relatively high unemployment. By the end of this year, inflation in Bulgaria will continue to be a problem, despite indications of easing in the second half of the year.

On an annual basis, consumer prices will reach their peak in June and July when inflation is expected to reach 6% and, by the end of the year, inflation is expected to ease down to some 4%, read the analysis of UniCredit. Economic growth in our country is forecast to lose some speed in the coming months due to difficulties in the recovery process in Bulgaria and weak prospects for the global economy. Let us remind our readers that the estimates of UniCredit are among the consecutive more pessimistic forecasts than the official Government’s projections. The 2011 Budget Act projects a 3.6% GDP growth. According to the summer forecast of the consultants from Ernst & Young, Bulgaria’s economy will grow by 3.2% this year and by 4.8% in 2012; the European Commission’s outlook is for a 2.6% increase in 2011 and a 3.8% growth in 2012; IMF expects a 3% increase this year and a 3.5% growth in 2012.

The analysts of UniCredit registered a positive trend in public finances. In the first four months of 2011, the budget reported a deficit of 0.7% of GDP, compared to a twice larger deficit for the same period of 2010 (1.8% of GDP). This results from the combination of strong growth of 11% in tax revenues on an annual basis and a 3.5% shrinkage of expenditures. Analysts expect a reduction of Bulgaria’s budget deficit to below 3% of GDP this year. Consumption is forecast to increase by 0.2% and 2.1% in 2011 and 2012, respectively, and the nominal monthly remuneration will probably go up from €357 this year to €380 in 2012.

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