Bulgaria Forecasts 1.9% GDP Growth in 2013 on Higher Demand

Bulgaria’s economy is forecast to expand 1.9 percent in 2013 after an estimated 1.2 percent growth in 2012, driven by increasing demand and investment linked to European Union aid.

Next year’s budget-deficit assumption is 1 percent of gross domestic product and 0.5 percent of GDP in 2014, after 1.3 percent of GDP this year, the Finance Ministry in the capital Sofia said on its website today. The government forecasts average EU-harmonized inflation at 3.4 percent next year, after 2.6 percent this year, according to the ministry.

Bulgaria, the EU’s poorest country in terms of economic output per capita, weathered the global crisis without borrowing from lenders abroad. Growth slowed to 0.5 percent from a year earlier in the second quarter, the same as in the first three months. The government works to cut the budget gap to help contain the fallout from the euro debt crisis.

The International Monetary Fund raised this year’s economic growth forecast for Bulgaria yesterday to 1 percent from a 0.8 percent estimate on April 17, and to 1.5 percent for 2013 citing recovering exports. The economy grew 1.7 percent last year, after a revised 0.4 percent in 2010. The European Commission forecasts the economy to expand 0.5 percent this year and 1.9 percent in 2013.

Flat Tax

The government plans to keep personal and corporate income taxes unchanged from a flat 10 percent next year, in an effort to attract more investment and boost growth, the ministry said.

Bulgaria plans to sell government bonds worth as much as 1.2 billion lev ($792.3 million) a year through 2015, the ministry said. Planned issue volumes will correspond to payments due on the existing domestic and foreign debts, it said.

The government plans to raise pensions by 9.3 percent in April next year and increase the highest pension to 770 lev before elections in June. It also plans to increase spending on education by 5 percent, according to the ministry.

To contact the reporter on this story: Elizabeth Konstantinova in Sofia at ekonstantino@bloomberg.net

To contact the editor responsible for this story: James M. Gomez at jagomez@bloomberg.net

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