Bulgarian economy accelerated in the second quarter of 2024, but timidly

The annual growth of the Bulgarian gross domestic product (GDP) accelerated slightly during the second quarter of 2024. The express estimates of the National Statistical Institute (NSI) – considered the best snapshot of the state of the Bulgarian economy – show that compared to the same period of 2023 the increase is 2%. This is a slight acceleration compared to the 1.9% in the first quarter of last year.

The main driver of growth is consumption - by households and companies, as well as government spending. Whether the growth was chiefly due to individual consumption or that of the public sector remains to be seen when the data is revised next month.

The growth rate was similar to the second quarter of the previous year and lower than in the spring of 2022 when the economy was booming on the back of inflation and rising wages.

The national statistics data also indicates that Bulgaria's GDP in the second quarter of the year grew by 0.5% compared to the previous quarter.

Final consumption expenditure - of households, companies and government - grew by 2.8%, slightly below the 3.4% reported in the previous quarter.

Gross fixed capital formation, or total investment in the country, grew by 6%. The exports of goods and services grew by 0.9%, and the imports - by 2.5%.

The acceleration of the Bulgarian economy is in sync with the forecast of the Bulgarian National Bank (BNB), which implies an acceleration of the demand for Bulgarian goods and services given the slightly upward trend in global terms.

A similar trajectory of global economic activity should have a favorable impact on the volumes of Bulgarian exports", the BNB states in its latest economic report and predicts an acceleration of growth in the second half of the year as well.

The factors for the positive development are mainly the internal demand and the assumed improvement of the prospects for the external demand for Bulgarian goods and services.

Most institutions predict growth for the Bulgarian economy for this year between 2 and 3%. The most optimistic is the assessment of the Ministry of Finance, whose estimates served to prepare the 2024 Budget - for a growth of 3.2%. The European Commission is more conservative and expects only 1.9%. BNB projects 2.1% growth for 2024.

Translated by Tzvetozar Vincent Iolov