Bulgaria's economy is likely to keep on growing at around 3% in the first half, after recording a stronger-than-expected growth of 3% for 2015, Raiffeisenbank Bulgaria said on Wednesday.
The political situation in the country is expected to remain stable despite some potential tensions in the ruling coalition, while external risks remain difficult to predict, Raiffeisenbank Bulgaria said in a press release.
Low interest rates are expected to stimulate household consumption in 2016, while the banking system's asset quality review (AQR) and weaker European funding, which is favoured by the business, are expected to restrain the growth of investments. At the same time, corporate bank deposits have been rising in the first months of the year, which confirms limited investment prospects in the country.
The planned budget deficit of 2.5% of GDP for 2016 will not compensate for the lack of European funding during the year, the bank noted.
It projected the unemployment rate to continue to ease to below 9.0% by mid-2016, while annual inflation is seen at about 0.2%.