Bulgaria's GDP growth to be 2.2%, then down to 1.5%
The reason for this is the weakened absorption of EU funds in connection to the technical timing required for launching projects under the new programming period. GDP growth is set to recover to 2.0% in 2017 as domestic demand strengthens. Private consumption is expected to grow over the whole forecast period.
The Commission expects that net exports will continue supporting growth over the forecast horizon. The export growth will be higher than the import growth.
The contribution of net exports to growth is projected to decline in 2017 and, as a result, Bulgaria's current account surplus is forecast to decrease from 2.1% of GDP in 2015 to 1.6% by 2017.
According to the Commission's expectations, the labour market will continue improving. Employment growth is projected to marginally increase from 0.3% in 2015 to 0.5% in 2017.
Together with the expected decrease in the labour force, this is likely to further reduce the unemployment rate to 8.8% at the end of the forecast horizon.
The Commission expects the inflation to rise gradually as the effect from the decline in commodity prices slowly diminishes, however it looks set to remain negative throughout 2016.
Nevertheless, the annual HICP inflation is expected to remain just below zero at -0.1%, with the Commission's experts expecting it to turn positive in 2017.
The general government deficit is estimated to fall to 2.5% of GDP in 2015 compared to the original budget deficit target of 2.8% of GDP. This improvement is mainly due to higher tax revenues, mostly attributable to improved tax administration.
The Commission forecasts that the headline deficit is to recede to 2.3% of GDP in 2016 and to 2.0% of GDP in 2017, reflecting measures on the revenue side. The public-debt-to-GDP ratio is forecast to increase from 27% in 2014 to 30% of GDP by 2017. ■