Economic growth can reach 1.6% in 2013

The Executive Agency for Economic Analysis and Forecasts (EAEAF) has predicted economic growth of 1.6% and a halt in the fall of the employment rate in its regular autumn report on the state of the Bulgarian economy. Uncertainty surrounding the Eurozone's future has diminished as European economies enter a period of low or negative growth. If the possibility of a worst-case scenario (a Euroarea break-up) continues to dwindle, economies could be expected to return to their potential growth trajectories, the agency's experts speculated.

The European Commission sees the Eurozone contracting by 0.3% in 2012 and expanding by 1% in 2013, while the IMF forecast a 0.3% expansion and a 0.7% growth, respectively. Since both predictions were made before the latest ECB moves and the ESM becoming operational, the reality is likely to prove a little more positive.

The positive development continued during the first half of 2012, GDP increasing by 1%, compared to the same period of last year. EAEAF expects economic growth of 1.8% this year and an acceleration of up to 2.8% in 2013. The expectations about the structure of growth in 2012 have changed towards a greater contribution of domestic demand at the expense of a negative contribution of net exports. EAEAF’s estimates for 2012 and 2013 are for potential GDP to grow by 1.6% on an annual basis, with a positive contribution of capital growth and the total factor productivity. Since this growth is below the forecast economic growth, the negative deviation from the potential can be expected to decline.

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