OECD lowered its forecast for Bulgaria's economy

The Organization for Economic Cooperation and Development (OECD) predicts, in a new report, that the Bulgarian economy will grow by 1.7% in 2023 and by 2.8% in 2024. The international institution has actually lowered its expectations for the country’s gross domestic product (GDP) growth, since in its June report it predicted it to reach 1.9% for 2023, and 3.2% - for 2024.

The OECD forecast for next year is far below that of the Bulgarian Finance Ministry’s 3.2%, on the basis of which the country’s draft budget for 2024 was prepared. It is closer to the updated outlook of the Bulgarian National Bank, but far above the forecast of the European Commission’s 1.8%.

According to the OECD, Bulgaria's economy will grow by 3% in 2025.

Low interest rates fueled a household credit boom, boosting private consumption, but this is easing," the OECD wrote in its analysis of Bulgaria.

The international institution expects a catch-up in the absorption of European funds, which will positively contribute to investments in 2024.

OECD describes inflation in Bulgaria this year as high and expects it to drop to 4.5% next year and to 3.1% in 2025. The organisation warns that the record jump in the minimum wage next year "creates risks for more persistent inflation".

The energy output traded on international markets may also have an influence on the average retail prices next year.

OECD also pays special attention to the declining labour force in Bulgaria and the rising costs of retirement payments. The institution emphasizes that reforms need to be made in this area, as the pressure on costs is long-term and will deepen.

Translated by Tzvetozar Vincent Iolov​