EC forecasts 3.5% growth for Bulgaria in 2018; revises estimate downward due to strong 2017

The European Commission (EC) issued a new forecast for 2018 GDP growth – 3.5%. This is a 0.3 p.p. below the previous forecast, mainly due to an upward revision of 2017 GDP, which increased the base year’s value of real production. In addition, the depreciation of the Turkish lira hurt exports growth, leading the EC to revaluate its estimate. For 2019 and 2020 EC’s forecasts 3.7% and 3.6% of GDP growth respectively. Domestic demand will remain the main driver of total production. Rising wages in the public sector are expected to be beneficial to the latter. The investment component is expected to grow at a slower pace, while imports will surpass exports in both years, however, with less negative contribution to GDP growth. Inflation is projected to fall to 2.0% and below as the effect of rising oil prices wears off, while employment would climb higher. The forecast for the EU (ex. United Kingdom) for 2018 is for growth to slow down to 2.2% after the 10 year high of 2.6% registered in 2017. 2019 and 2020 growth estimates are 2.0% and 1.9% respectively.