Academy of Sciences predicts a 1.3 % economic growth for 2012

This year, the expected economic growth will be minimal and approximately 1.3%, predicted yesterday scientists from the Economic Research Institute with BAS (Bulgarian Academy of Sciences). They presented their annual report dubbed "Economic Development and Policy of Bulgaria: Estimates and Expectations."

The BAS forecast is closer to the estimates on the the expected growth of 1.4%, which was announced by Deputy Minister of Finace, Boryana Pencheva. Recently, the Head of the Center for Economic Development, Georgi Prohaski also predicted an increase of 1%.
The Bulgarian National Bank and the IMF, however, are much more cautious in their projections for our economy. They preditct respectively 0.7 % and 0.8 % growth. The European Commission, in its turn, revised recently its outlook up to only 0.5 %.

It is not excluded that over the next two years, a greater GDP growth be observed, but it will advance at a relatively slow pace, commented Victor Yotsov.
It is wrong to think that increased exports would play the role of locomotive, which will pull out Bulgarian economy from the economic crisis. This cannot happen because the exports structure is deformed - we rely on export, which has little added value. Consumption is also shrunk. Thus, Yotsov commented on the reasons for the expected low growth. According to him, Bulgaria is statistically in recession, but there is economic uncertainty in the business environment, which is complemented by the dire financial situation of Greece.

As a result of the economic crisis and the uncertain economic environment, the profitability of Bulgarian enterprises slumped by 54-85%, while their total intercompany indebtedness is rapidly increasing. Some 90% of companies with liquidity problems are micro-enterprises with a stuff of up to 9 employees. Bulgaria is not facing the danger of large budget deficit, but the irregular payments to the business sector as well as the decline in investments and the postponement of reforms in key sectors worsen the overall business environment, according to the BAS analysis.

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