GDP GROWTH OF 3.6% WILL BE POSSIBLE IN BULGARIA NEXT YEAR, 6% - IN 2012

2014 seems the earliest possible date for Bulgaria's accession to the Eurozone

The Bulgarian economy will return to a moderate growth of around 3.6% in 2011 before picking up speed to around 6% in 2012, showed the latest forecast of Ernst & Young for the development of the country in the next few years. The consulting company is the second international institution which supports the Government's expectations. We would like to remind our readers that, in early December, an expert from Fitch Ratings estimated that Bulgaria will start to recover in 2011 and the target set by the Bulgarian Government for economic growth of 3.6% next year is achievable.
 

The report of Ernst & Young stated that the revival in the domestic economy was driven almost entirely by the increase in exports, while there was a slight recovery in investments in response to stronger internal demand. However, according to experts, the continuing problems in the Eurozone could lead to a decline in exports which could reduce GDP growth in the fourth quarter of the year. As a result, the consulting company forecast a decline in GDP of almost 1% in 2010. The report, however, stated that there was a risk that economic growth would not reach the forecast figures due to the implemented tight fiscal policies aimed at reducing the budget deficit from 4.5% of GDP this year to 2.5% in 2011.
 

Despite the surprisingly stable levels of unemployment - about 9% in September, low consumer confidence, rising inflation and the future freeze in public sector wages in 2011 substantially influence the consumer basket. As a result, household consumption is expected to decline by 3.1% in 2010, in addition to the 6.2% drop recorded in 2009, read the report. World Bank experts pointed out domestic demand as the major factor which could impede economic recovery.
 

Ernst & Young experts said that the expectations of the Government that Bulgaria will be admitted to the waiting room of the Eurozone (ERM-II) in 2011 and that, in 2012, the Bulgarian lev (BGN) will be accepted in the Eurozone were too optimistic. Given the fiscal and debt crisis in the EU, and its impact on future Eurozone members (especially countries such as Bulgaria which face problems similar to those of Greece in reporting their fiscal data), 2014 now seems the earliest possible date for accession to the Eurozone, said the consultants.