Country Economic Forecasts > Bulgaria

The Bulgarian economy grew by a robust-looking 3.0% year-on-year in Q2 2016. However, the majority of this growth came from an increase in inventories rather than any marked improvement in consumer spending, investment or net external trade. Indeed, the latter exerted the largest drag on GDP growth in Q2, with export volumes falling by 0.9% q/q and imports rising by 1.6% q/q.Consumer spending growth was relatively steady at 2.4% year-on-year in Q2, down only slightly from 2.5% in Q1. While consumption growth should still be better than in most of 2015, supported by strong real income growth, it is likely to slow somewhat in H2 2016 as the trend improvement in the labor market moderates and increased uncertainty about the impact of Brexit on the EU undermines sentiment.August survey data suggest that Brexit-related concerns may have started to have more of an impact on the major European economies than seemed the case immediately after the vote. We expect world trade weighted by Bulgaria's export shares to grow by around 3-4% pa over the next few years. Against this background, Bulgarian export volumes are forecast to increase by just under 3% a year in 2016 and 2017, while overall GDP grows by 2.9% this year and 2.5% next year.