The European Bank for Reconstruction and Development (EBRD) said on Thursday that it expects the economic fallout of the war in Ukraine to translate into a 2.8% growth of Bulgaria's real gross domestic product (GDP) in 2022, a downward revision of the 4.4% growth forecast made in November.
In 2023, EBRD projects the country's GDP to grow by 3.6%, it said in a special round of emergency economic forecasts.
This is slightly lower than the overall expected growth of 3.9% for the EBRD's southeastern European region, which also comprises Greece and Romania. The region's GDP as a whole is seen to add 2.8% in the current year.
In addition, the EBRD expects that Bulgaria may experience a slowdown in foreign direct investment (FDI), due to its proximity to Ukraine and particularly the context of a militarisation of the Black Sea.
"Russia and Ukraine supply a disproportionately high share of commodities – from energy to metals to food to fertiliser (including ammonia and potash, also exported by Belarus). Prices of food commodities, oil, gas and metals increased sharply as markets anticipated a major reduction in exports from Russia, Ukraine and Belarus. The shortage of commodities started reverberating through supply chains," the EBRD said.
The lender added that its forecasts hold a high degree of uncertainty and make the assumption that a ceasefire may be negotiated within the next two months. In this scenario, assuming that a major reconstruction effort in Ukraine starts soon after, 2023 GDP levels may be brought back close to, albeit still below, pre-war terms.
Last year, Bulgaria's economy grew by 4.2%, according to data in the EBRD report.
The bank said it plans to put out another forecast in the next two months or so, which would factor in further developments. Its regular economic forecasts are published bi-annually, in May and November.