Bulgaria's economy is expected to expand by 3.5% in 2021, France-based credit insurance company Euler Hermes said on Friday, increasing its November forecast by 0.3 percentage points.
In 2022, Bulgaria's gross domestic product (GDP) growth is expected to accelerate to 3.8%, Euler Hermes said in an e-mailed statement.
Bulgaria's GDP fell by 3.8% year-on-year in the fourth quarter of 2020, following a 5.2% decrease in the previous quarter, according to the latest data published by the National Statistical Institute (NSI).
Bulgaria's unemployment rate is forecast to reach 7.4% in 2021 due to the economic fallout caused by the coronavirus pandemic, marking one of the highest jobless rates in the region of Central and Eastern Europe (CEE), Euler Hermes said. In 2022, with the expected gradual recovery of businesses, the unemployment rate in Bulgaria could fall to 6.2%.
This situation on the local labour market will also result in a significant slowdown in the growth of wages in 2021, to 3%, following the solid increases in the previous two years, of 11.5% and 7%, respectively. Wages in Bulgaria are expected to increase by 5% next year, Euler Hermes added.
According to Euler Hermes analysts, Bulgaria will post inflation of 1.1% in 2021 and 2.1% in 2022, influenced by the labour market environment. The average annual inflation in 2020 was 1.7%, according to the NSI.
Bulgaria's consumer prices rose by 0.6% year-on-year in March following a 0.1% decrease in February, the statistical office said earlier this week.