The IMF Projects a 4% Decline in Bulgaria's GDP
The International Monetary Fund forecasts a 4% drop in Bulgaria's GDP this year. At the same time, however, the Bulgarian economy is predicted to return to growth of 6 percent by 2021.
The fund projects the unemployment rate in the country to reach 8% compared to 4.2% last year. By 2021, the unemployment rate is expected to be around 4.5 percent.
The most negative scenario of the Institute for Economic Research at the Bulgarian Academy of Sciences foresees up to 5.7% decline in Gross Domestic Product, accelerating inflation to 5.2% on an annual basis in Bulgaria. The lighter scenario predicts a 2.4% drop in GDP and a slight increase in inflation compared to 2019. According to the baseline scenario, BAS economists project a 4.3% drop in GDP and speeding up the inflation to 4.2% on an annual basis.
For comparison, in updating the budget, Finance Minister Vladislav Goranov has set a 3% downturn in the most negative scenario. On this basis, he received a mandate to form a 3.5% budget deficit and issue new debt of up to BGN 10 billion for 2020.
The Belgian banking and insurance group KBC expects a serious collapse of the Bulgarian economy in 2020. According to the baseline scenario developed by Belgian economists, our economic downturn could reach 10%, and according to their most optimistic forecast, it could stop at 4%. The most negative estimates of KBC, which owns UBB and DZI, show an economic decline of 12 percent during the year.
This is also the worst forecast for the Bulgarian economy, that has been announced since the beginning of the year, after economists at Raiffeisen Bank International predicted that the economy would shrink by 3.9 percent.
According to KBC, the Bulgarian economy will return to growth as early as 2021. In the most realistic scenario, they expect it to grow by 5% next year, and in the other two cases by 3% and 2% respectively.