Bulgarian Economy is One of the Best Examples in the Balkan Region - Unicredit

According to UniCredit Bulbank's Chief Economist Christophor Pavlov this year the newly created jobs will amount to about 30,000 and another 20,000 in 2019.

Most Central and Eastern European countries have already reached the peak of economic growth and will start slowing down but in Bulgaria "the best is ahead". This was reported in an interview for Capital.bg

The economists expect a development in the economy of the whole Balkan region over the next two years.

The bank's analysts are speculating that the Bulgarian economy will grow by 4.4% this year, and 4.2% in 2019. By comparison, the growth in 2017 was 3.6%.

While in Hungary, the Czech Republic and Romania economies are already showing signs of overheating, the forecasts for Bulgaria remain stable. Growth risks are mainly related to foreign trade and, in particular, the threat of trade wars and the position of Russia and Turkey in the Middle East.

The global economy, especially in Europe will remain strong and stable. However, the probability that the US's positive economic cycle will tumble over the next three years, exceeds 90% according to expert models, which will also affect global growth.

Private consumption will continue to be a major driver of growth, backed up somewhat by emerging jobs and low consumer credit prices.

The lack of highly qualified labour force, however, is becoming more and more visible and acute to the business. "Over 40% of managers in Bulgaria point to the lack of sufficient workforce as the main obstacle to future plans for business expansion," Pavlov said. However, the situation is not as critical as in countries such as the Czech Republic, Poland, and especially Hungary, where the share is 90%, he added.

According to bank experts, public investment in Bulgaria has fallen by 3% in 2017, while capital investment by the private sector has grown by 7%. The biggest contribution to last year's positive results was the investment in construction driven by higher house prices. Pavlov stressed that the building permits issued increased but are still only about half of the levels seen during the 2007-2008 boom.

Pavlov also explained that the basis of the slowdown in public sector investment last year were the poor planning and the unrealistic forecasts of the new projects. The factor for the increase in investments over the next two years is the absorption of European funds.

A good factor for future investments and optimistic forecasts is the production capacity of businesses throughout the region. All countries move beyond their potential growth, which means that free production capacity is exhausted. This will cause companies to invest in expanding their production capacities.

The specialists explained that Bulgaria still counts GDP per capita at half the EU average, even after taking into account the different levels of purchasing power, which is a problem in front of the adoption of the country in the eurozone. The rule of law, or its lack, is also a problem. Another source of uncertainty comes from the banking sector. Although asset testing and stress tests had to calm investors, the fact that the biggest bankruptcy of a European bank as a share of assets in the banking system since the crisis has come under the supervision of the BNB will be pursuing Bulgaria in the coming years.

Bilyana Ninova

Bilyana Ninova is a Marketing specialist, content creator and hobby photographer.

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