EBRD raised 2022 GDP growth forecast for Bulgaria to 3.0%

29.09.2022 Source: EBRD; FFBH

In its September 2022 Regional Economic Prospects report, the European Bank for Reconstruction and Development (EBRD) lifted its GDP growth forecast for Bulgaria to 3.0% for 2022. However, growth for 2023 is expected to decelerate to 1.5%. EBRD noted that owing to the robust performance in the first half of the year, GDP growth for 2022 has been revised upward by 0.5 p.p. from May 2022 forecast. Yet uncertainty over gas supply, weakening domestic and foreign demand amid high inflation and deterioration of confidence resulted in a downward revision of 2023 GDP growth by 1.5 p.p. EBRD also indicated the ongoing political crisis may cause delays in the absorption of the second disbursement of the EU’s Recovery and Resilience Facility. Overall, the GDP growth in the EBRD regions is expected to accelerate to 2.3% in 2022, an upward revision of 1.2 p.p. from May. Growth forecast for 2023 is downgraded by 1.7 p.p. to 3.0% reflecting the reduction in gas supplies from Russia, including its spillover effects from slower growth in advanced European economies, as well as increased inflationary pressures on the global economy and the EBRD's regions of operations. The forecasts are subject to high downside risks in the event of an escalation in hostilities or further restrictions on gas exports from Russia. The Bank indicated that with the complete cessation of gas supplies from Russia to Europe, GDP growth in the regions of operations of the EBRD could be lower by another 1.3 p.p. in 2023.