Ernst & Young forecast for the spring: Recession in nine Eurozone countries, 1.3% growth in Bulgaria

The economies of nine of the 17 countries in the Eurozone will shrink this year and the entire monetary union will fall into recession with a decline of 0.5%, according to the spring forecast for the Eurozone of Ernst & Young. The consultants expect the Eurozone to return to growth of around 1% in 2013 before reaching again a peak of 2% in 2015-2016.

According to this scenario, Bulgaria’s exports which have been the main driving force of our country’s recovery so far, will remain low. As a result, the experts of Ernst & Young forecast a GDP growth of just 1.3%.

“Despite some progress made in relation to the debt crisis, the trend for 2012 remains downward because its impact on banks’ balance sheets may be more negative than we expect. Moreover, in the current situation which is susceptible to risks and the declining real estate market (62% year-on-year drop in Q4 2011), inflows from foreign direct investments this year will remain considerably below the levels from before the crisis,” projects the forecast.

Next year, however, Bulgaria will achieve a more tangible economic growth to above 3% as a result of the 5% increase in consumption. This will boost investments. Ultimately, in 2014-2015, growth will accelerate to 5%. The desired 1.4% of GDP deficit is unlikely to be achieved in 2012 due to the lower than expected growth and hence - the lower budget revenues, warned Ernst & Young. According to the experts, Bulgaria’s projected accession to ERM II - the so-called waiting room to the Eurozone - could be delayed beyond 2013 instead of happening in 2012 or 2013 as the Government hopes.

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