Bulgaria's GDP growth in the coming years will recover but will stay modest by emerging market standards.
Private consumption will continue to be the main economic growth driver, as Bulgaria remains unable to attract the foreign investment which has bolstered GDP-growth in the past.
We are forecasting Bulgaria's budget deficit to remain under 3.0% of GDP in the years ahead and, although the overall debt level will rise, it will stay at a low level compared to regional peers. Bulgarian goods exporters will benefit from a cyclical growth upswing among its European trading partners. On top of that, we expect services exports to perform strongly, as the country's tourism sector stands to benefit from political instability and security threats in rival tourist destinations.
After four years of deflation, price growth in 2017 and beyond will remain inflationary.
Fiscal deficits and public debt will remain well within the boundaries of the European Union's fiscal rules.
Major Forecast Changes
We revised up our real GDP growth forecasts from 3.7% to 3.5% in 2017 and from 3.5% to 3.7% in 2018