The European Commission confirmed its forecast that economic growth in Bulgaria will stand at 1.4% this year, before it accelerates to 2.0% in 2014.
The EU expects that the country's economy will recover slowly in the coming years, mostly on the back of a projected rise in domestic demand, the Commission said in its 2013 Winter Forecast report.
"While exports are forecast to benefit from the expected gradual recovery in the EU markets over 2013-2014, imports are set to grow even faster due to the revival of household consumption and investments," the Commission said.
The financial sector is expected to contribute positively to growth with local banks set to lower both deposit and lending interest rates, which is seen as supporting investments and consumption in the country.
Labour market, however, is forecast to turn to only a sluggish recovery over the 2013-2014 period, while inflation is expected to level off at 2.6% in 2013 and 2.7% in 2014.
The fiscal deficit is set to weaken slightly to 1.3% this year, but to revert back to 1.0% of GDP in 2014.