Bulgaria: Forecast for Economic Growth in 2022

Quarterly macroeconomic analysis of UniCredit Bulbank:

Economic growth in 2022 will remain at last year's levels amid growing fears of inflation

Economists of UniCredit Bulbank forecast economic growth of 3.6% in their latest report. Experts slightly reduce the forecast for annual GDP growth for 2022, compared to the expected 3.9% three months ago, due to more severe and prolonged disruptions in supply chains and the looming higher and longer-term inflation. Its growth is projected to reach 6% on average for the whole of 2022, with the main reasons continuing to be related to high energy prices, supply chain disruptions, and base effects. Economists expect these factors to have a temporary effect in 2023, inflation to fall to 3% on average for the year, and economic growth to accelerate to 4.3%, with unemployment falling to levels corresponding to full employment.

Bulgaria: 7.8% annual inflation in December

Economic forecasts for inflation are based on the assumption that electricity and heat prices for households will rise by 15% in April 2022. According to economists, inflation will have an adverse effect on consumer confidence and the structure of GDP is likely to change.

Increase in investments at the expense of private consumption in the structure of GDP

Private consumption will contribute less to economic growth in 2022 than in 2021, mainly due to projected higher consumer price inflation. This year the rise in prices will reduce the disposable income of households to a much greater extent than in 2021. Despite lower consumption levels, economists at UniCredit Bulbank expect an increase in investment growth, driven mainly by larger projects in the public...