The WB revised downwards its 2019 GDP growth forecast for Bulgaria from 3.1% y/y projected in January to 3.0% y/y in its April Financial Inclusion report on Europe and Central Asia. It also cut its forecast for GDP in 2020 to 2.8% y/y, down from 3.0% y/y projected in January. Economic growth will be 2.8% y/y in 2021, according to the WB. WB’s projections remain lower than the recently revised government forecast for 3.4% y/y for 2019 and 3.3% y/y in 2019 and 2020.
Although the WB did not specify the reason for its downward revision, it talked about general challenges to the economies in Central Europe. Factors such as shrinking working-age population, tight connections with slowing economies from the eurozone and tepid private investment growth were flagged as main impediments to peer economies from the Central Europe region and we think they could apply to Bulgaria as well. The WB was concerned that the absence of sustained implementation of structural reforms in the region could further limit private investment growth.