Fitch Maintains Bulgaria at 'BBB' with Stable Outlook
Fitch Ratings said it has affirmed Bulgaria's Long-Term Foreign-Currency Issuer Default Rating (IDR) at 'BBB' with stable outlook. Bulgaria’s ratings are backed by its external and public finances, the policy framework for its accession to the eurozone as well as stable growth prospects, Fitch Ratings said in a statement on Friday.“The ratings are constrained by lower income levels compared with the current 'BBB' median, and weak demographics which could constrain growth and weigh on government finances over the long term. Governance indicators are in line with peers,” the agency added. Fitch also said in the statement:"KEY RATING DRIVERSEconomic growth prospects are broadly in line with peers. Fitch expects real GDP growth to remain largely unchanged at 3.7% in 2018, before slowing to 3.5% in 2019 and 3.0% in 2020. Domestic demand should benefit from a scheduled 10% increase in public and minimum wages from January 2019; household consumption increased by 7.5% yoy in 1H18 (1H17: 4.0%). Investment growth is expected to increase from 3.2% in 2017 to 7.0% in 2018 and an average of 6.5% yoy in 2019-20, driven by higher capex, funded by the EU. These investments will be import-intensive, causing the net exports contribution to GDP to remain negative over the forecast horizon.