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Friday 19th of April 2024, 21:39 CET |
| Bulgaria: Economic Forecast |
September 6, 2002
Economist
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Written by Economist Intelligence Unit
Posted by HW on April 18, 2024
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The coalition between the Simeon II National Movement (SNM) and the Movement for Rights and Freedoms (MRF) still has a sufficiently large parliamentary majority to pass legislation. However, the Economist Intelligence Unit expects divisions within the SNM to deepen further, which could force the government to come to an accommodation with other centre-right groupings in order to stay in office in 2003. Policy in 2002 will focus on completing a number of delayed privatisations and on keeping the budget deficit low, in line with the deal agreed with the IMF. As growth in exports and gross fixed investment decelerates, and as consumer spending is hit by another round of energy price increases, real GDP growth is forecast to slow to 3% this year. In 2003 growth is set to pick up to 3.7%, boosted by a gradual recovery in foreign demand. Inflation will fall in 2003 and the current-account deficit is forecast to shrink to the equivalent of 5.9% of GDP in 2002 and to 4.1% of GDP in 2003.
Key changes from last month
Political outlook
The MRF, the smaller party in the governing coalition, has criticised some aspects of government economic policy. In particular, has attacked the approach taken to the privatisation of Bulgartabac, the state tobacco concern. This reinforces our view that tensions within the government are likely to come to a head towards the end of 2002 or in early 2003.
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Economic policy outlook
The consolidated state budget recorded a healthy surplus in the first seven months of the year and we now expect the government to meet its objective of keeping the 2002 budget deficit to 0.8% of GDP. However, because of political pressures, government hopes for an early move to a balanced budget are unlikely to be realised.
Economic forecast
Weaker growth is now expected in the EU in both 2002 and 2003, and, as a result, we have revised down our forecast for Bulgarian export growth and for GDP growth in 2003. Conversely, lower international interest rates will reduce interest payments on Bulgaria's foreign debt. |
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