Ernst&Young cuts 2011 GDP forecast for Bulgaria
International consultancy firm Ernst&Young has lowered its guidance for Bulgaria's economy growth to 2.12 per cent in 2011 from 3.2 per cent projected in the summer.The downward revision caused by the sharp deterioration in growth prospects for the EU, which is Bulgaria's main export market, continued weak consumer spending and the high level of uncertainty for businesses.Exports showed strong improvement in 2010, but their growth pace was seen slowing down to below 10 per cent this year and to 5.5 per cent in 2012.The consultancy also considers that domestic market recovery is weak, mainly because of the high inflation levels recorded at the start of the year and the squeezed household budgets. As a result, consumer spending is forecast to grow by only 1.2 per cent in 2011.The effects of the recession continue to weigh on household spending and consumer confidence is at no better levels than those seen in 2010 and well below the rates observed before the recession.The high inflation, which reached 5.6 per cent in March, further strains consumer spending. However, should the external environment improve, employment is forecast to soon start to rise, while inflation is seen to gradually decline, translating into a rise in consumer spending of more than three per cent in 2012.This improvement, together with the expected increase in infrastructure spending, could boost the country's gross domestic product (GDP) by 2.6 per cent in 2012, Ernst&Young said. The rate, however, is lower than the 4.8 per cent economy growth projected in the summer./Source: The Sofia Echo/