site.btaEuropean Commission Predicts 0.8% Economic Growth for Bulgaria in 2015

European Commission Predicts 0.8% Economic Growth for Bulgaria in 2015


Brussels, February 5 (BTA) - Real GDP is estimated to have
increased by 1.4 per cent in 2014 as a whole, before moderating
to 0.8 per cent in 2015, the European Commission said in its
Winter Economic Forecast. Economic growth is projected to
slightly increase to 1.0 per cent at the end of the forecast
horizon.

After recovering in 2014, private consumption is expected to
lose vigour in 2015-16 due to the expected weak growth in real
disposable income. In 2015, household consumption is supported
by lower fuel costs. Stabilisation of labour market conditions
in 2014 will also be a supportive factor going forward, but the
decline in the working-age population has already become a drag
on household disposable income and consumption. In addition,
fiscal tightening is likely to dampen the outlook for consumer
spending in 2015, the Commission says.

The public investment outlook is set to turn negative in 2015,
as the programming period is coming to an end. With financial
conditions remaining tight, firms are expected to freeze or
postpone investment plans. As a result, private investment is
projected to remain weak in 2015-16. The exporting sectors are
forecast to benefit from progressively improving external demand
over the two coming years. After being negative in 2014, the
contribution of net exports to overall growth is expected to
return positive in 2015 sustained by modest gains in
competitiveness. The current account surplus is forecast to
hover around 2 percent of GDP by 2016.

Having peaked at 13 per cent in 2013, the unemployment rate is
expected to have retreated to 11.7 per cent last year, mainly
due to the decline in the labour force, whereas employment
stabilised, the EC says further in the forecast. While the
number of employment contracts fell in 2014, the number of
self-employed marginally increased, leaving overall employment
broadly unchanged. In a context of subdued growth, employers are
likely to favour increasing productivity over job creation
throughout 2015. Unemployment is forecast to fall to 10.4 per
cent by 2016, its lowest level since 2010.

However, the deficit could also turn out smaller because of the
government plans to make changes to the pension system which
would result in redirecting some of the private "second" pillar
pension funds into the state system. This would improve the
general government deficit by the volume of redirected pension
contributions. In 2016, the deficit is set to remain broadly
stable at 2.9 per cent of GDP, based on a no-policy-change
assumption. /VI/TK/






/СН/