European Commission Revises Bulgaria’s 2012 Growth Forecast to 0.5%/GDP

European Commission Revises Bulgaria’s 2012 Growth Forecast to 0.5%/GDP

The European Commission said it decreased by 1.8 percentage points to 0.5% of the projected gross domestic product (GDP) its forecast for Bulgaria's economic growth in 2012.

It also reduced by 1.1 percentage points to 1.9% of GDP its expectations for the country's economic growth next year, the Commission said in its spring forecast report published on Friday.

"These revisions reflect the downward adjustment in EU economic prospects and its spill-over effects to the Bulgarian economy via the trade channel and lower confidence, affecting investment and consumption," the report added.

Labour market weakness, deleveraging of the corporate sector and the downsize in the construction sector were the main factors influencing Bulgarian restrained recovery, according to the Commission.

It pointed out, however, that the financial sector has remained stable, also providing a modest growth in private sector credit last year. The public finances also remained relatively strong and will not face major adjustment needs in the medium term.

Investments in Bulgaria have declined substantially for the past three years and the Commission expects them to contract even further in 2012 before moving to a positive trend from next year.

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