Despite the expected dwindling export and labor market pressure, the country will avoid recession

The forecast for Bulgaria’s GDP growth rate for 2012 is lowered from 2.6% to 1.5%, as evident from the latest quarterly review of UniCredit analysts on the economies of Central and Eastern Europe. Shrinking of exports and a negative pressure on the labor market is also expected.

The basic reason for the reduced GDP growth forecast are the signals for worsened perspectives for the Eurozone economies, as well as the unexpected dramatic drop of investments in Bulgaria in the third quarter of this year. From an objective point of view, the challenges to the recovery of the Bulgarian economy remain the same as those identified in the previous, September issue of the quarterly economic review. These are the shrinking domestic demand combined with the slow reduction of corporate sector indebtedness and slow recovery of the real estate and the labor markets.

UniCredit economists expect that in 2012 there will be more pressure for shrinking of the corporate sector balance. Besides, the worsening of the external environment will not only limit exports but is also expected to put at risk the labor market stabilization process that started to take shape in the middle of 2011.

MACROECONOMIC DATA AND FORECASTS

	2009	2010	2011E	2012F	2013F
GDP (Billion EUR)	34.9	36.0	38.3	39.5	41.3
Real economy – change on an annual basis (%)
GDP	-5.5	0.2	2.0	1.5	2.7
Consumption	-7.6	-0.6	1.5	1.2	2.0
Fixed investments	-17.6	-16.5	1.1	1.8	4.7
Public costs	-4.9	-5.0	-2.1	-1.6	-0.4
Export	-11.2	16.2	9.3	-0.4	1.8
Import	-21.0	4.5	6.8	-0.7	1.6
Monthly remuneration, nominal (EUR)	311	331	350	361	376
Unemployment (%)	8.4	11.3	12.3	12.2	11.7