Raiffeisenbank: Crisis to hit Bulgaria three months later, GDP to grow by 2.5%

Raiffeisenbank lowered its forecast for the growth of Bulgaria’s economy in 2012 from 4% to 2.5%, representatives of the financial institution announced yesterday. The downward revision was motivated by the turmoil on financial markets and the numerous signals of slowdown in the major world economies. Practically, this is the first banking institution in our country, admitting by a revision of its economic forecast the impact of turmoil on global markets on Bulgaria.

Our country is no exception to the general trend in Europe, though. Only days ago, Raiffeisen Bank International, 100% owner of the Bulgarian subsidiary, significantly lowered its forecast for the economic growth in the Eurozone in 2012, from 1.7% to 1.1%. Expectations are that the lower consumer demand in countries that are major trade partners of Bulgaria (primarily Germany), would result in a significant slowdown of Bulgarian exports growth, while the inflow of money and foreign direct investment will weaken further.

According to Kaloyan Ganev, Chief Economist of Raiffeisenbank, the effects on our economy will be felt somewhat later, in at least three months, as businesses will continue to fulfill orders placed by mid-2011. Therefore, the estimated GDP growth rate for 2011 will remain unchanged at 2.5%. In 2012, the recovery of Bulgaria’s economy, in general, will repeat the dynamics observed during 2011, commented Ganev. Consumption is expected to increase by merely 1%, investments - by 3.5%, while export growth will slow down to the modest 3.6% on an annual basis, compared to rates observed until now. The labour market is not expected to recover either next year and the unemployment rate is forecast to remain at around 11%.

At the end of last month, the European Bank for Reconstruction and Development (EBRD) lowered its forecast for economic growth in Bulgaria to 2.3% in 2011 and 3.7% in 2012.

According to the latest data of UniCredit, economic growth will lose some of its momentum in the coming months because of the difficulties in the recovery process and the worsened outlook for the global economy. Bank experts predict GDP growth of 2.8% in 2011 and 3.3% in 2012 on an annual basis. UniCredit representatives confirmed to Klassa daily that they would also revise downwards their estimates in accordance with recent events. Specific figures will be made public at the beginning of September.

OTP Bank, owner of the Bulgarian DSK Bank, forecast some 3.4% economic growth in 2012-2015 the period, Eurobank EFG Group predicts GDP growth of over 2.5% for 2011, and Ernst & Young have estimated the growth rate at 3.2% for this year, expecting it to accelerate to 4.8% in 2012 and to 5.6% in 2013.

According to forecasts of the European Commission’, economic growth will reach 2.8% this year and 3.7% in 2011.

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