Bulgaria's gross domestic product (GDP) will decrease by 5.1% in 2020, the European Commission said on Thursday, improving its forecast for a 7.1% contraction of the economy made in July.
"Lower employment and subdued consumer confidence, related to the second wave of the pandemic, are set to weigh on private consumption, while the government’s anti-crisis measures are expected to support private income," the EU's executive body said in its Autumn 2020 Economic Forecast report.
The Commission also lowered its projection for Bulgaria's economic growth in 2021 to 2.6% from 5.3% predicted in July. Bulgaria's GDP is then expected to rise by 3.7% in 2022.
"Both exports and consumption are set to contribute positively to the expansion in the next two years, in line with positive external demand and labour market developments," the Commission said.
Investment activity is expected to recover gradually in 2021 before growing strongly in 2022 on the back of the improved cyclical position.
Bulgaria's jobless rate is expected to rise from 4.2% in 2019 to 5.8% this year, before gradually decreasing to 5.6% in 2021 and 5.0% in 2022.
The harmonised index of consumer prices in Bulgaria is seen slowing its rise from 2.5% in 2019 to 1.2% in 2020 due to the lower fuel prices. HICP inflation is the expected to slightly pick up to 1.4% in 2021 and 1.8% in 2022.
"In the next two years inflation will be driven mainly by services inflation, continuing the upward trend of recent years," the Commission said.