Total Economic Growth in 2007 First Quarter Expected to Reach 5.7%

Total Economic Growth in 2007 First Quarter Expected to Reach 5.7%

Total economic growth in the first quarter of 2007 is expected to reach 5.7% – 5.9 % and for the whole year it is expected to be about 6 %. A gradual slow-down is expected to occur from now on, according to a research carried out by the Center for Economic Development (CED) for the first three months of the year, BTA reports.

Economic growth in 2006 was mainly due to growth in the field of employment rather than in the field of production, the report states. A short-term acceleration is likely in 2008 and 2009 on the condition that money from the Euro funds is well and rightly used. The tendency for a faster growth in import than in export was reestablished in the beginning of the year after it was interrupted in 2006.

During the first two months of 2007 the deficit on the current account grew to 3.4 % of the annual GDP. Just 40% of this deficit is covered by direct foreign investment, however due to a change in the methodology of the statistic monitoring these data cannot be used to make long-term prognosis, CED point out.

It is expected that deficit on the current account for 2007 will not exceed 18 % of the GDP and will be covered to a large extent by the flow of foreign investment. In 2008 and 2009 the deficit on the current account will hold at levels close to that of 2007, the research also indicates.

On an annual basis inflation is decreasing. People’s short-term pro-inflation expectations in view of the country’s EU accession have not been realized. No serious changes in the administratively regulated prices and in import prices are expected which makes it unlikely for the total accrued inflation for 2007 to exceed 4.5 % provides for a decrease tendency for 2008 and 2009, CED’s experts add.

The decrease tendency in unemployment is continuing but on a slower basis. The banking sector is stabile while consolidation within it continues. Leasing proves to be one of the fastest growing and profitable branches of the financial system.

Bulgarian Economic growth in 2006(6.1% real GDP growth) was a little slower than in 2005(6.2%). The most important aspects in the formation of the total economic growth in 2006 compared to the previous year is the accelerated growth in the added value in industry (8.3% against 4.7 % in 2005) and the slow-down in the investments (17.6% against 23.3 % in 2005).

The report also states that 2004 was the year with the fastest economic growth (6.6%) according to data from the National Statistical Institute (NSI).

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