The GDP of Bulgaria is expected to contract by close to 1 per cent this year and grow by 3.6 per cent in 2011, according to Ernst & Young as quoted by its Sofia office.

The recovery of the Bulgarian economy is moved almost entirely by a growing export with signs of an investment recovery in response to a stronger external demand.

Considering the lingering problems in the euro zone, the pull on the economy coming from growing export is likely to weaken to a degree, slowing down the GDP growth in the fourth quarter, which is why Ernst& Young expect the economy to shrink by 1 per cent this year. Next year the economy is forecast to show a moderate growth of some 3.6 per cent before it piks up to around 6 per cent in 2012. The analysis warns of a growing risk for the economy from the restrictive fiscal policy.

The decline in consumer spending in 2010 is expected to be followed by a growth of 2.4 per cent in 2011 but the risks of worsening of the situation continue to dominate the demand forecasts.

The weak economy of the EU is sure to affect the growth prospects of Bulgaria in the next few years, according to Ernst&Young. With many Bulgarians working in southern EU member states with weak growth, including Greece, Italy and Spain, the money transfers from workers abroad (making up 3.3 per cent of GDP) contracted by 12 per cent in 2009 and are expected to remain low in the coming years.

Considering the fiscal and debt crisis in the EU and the aftermaths for the future members of the euro zone, 2014 seems to be the earliest possible date for Bulgaria's accession to the euro zone, the analysis says.

Source: BTA