Bulgaria’s economy is expected to grow between 1.5% and 2.6% in 2015, financial analyst from Capital daily Nikolay Stoyanov said during the annual forum Next Year’s Business Plan held in Bulgaria’s capital Sofia on November 17. Against the backdrop of rapidly growing results during the third trimester of the year, these economic forecasts may even turn slightly conservative, Mr. Stoynaov told Radio Bulgaria. On the other hand, the business plans of the local companies may turn too expansive and optimistic, if for instance the state authorities make a swift turn and disrupt the business development plans of each company. More from Nikolay Stoyanov:

“2015 is a special year from an economic point of view, because a series of positive factors benefited the local economy and triggered a higher than expected economic growth. On one hand, this was due to the low prices of fuels and raw materials, which boosted the local economy, which is highly dependent on the import of gas and petrol. On the other hand, the measures of the European Central Bank aimed at easing the monetary policy in the union resulted in lower interest rates and the business and the government were able to use a cheaper financial resource. The weak Euro also helped to a big extent the Bulgarian exports. Although we did not witness any significant activity on the credit market, some loans were restructured and renegotiated, thus helping some of the local companies take a bit of fresh air.”

In 2015 Bulgaria showed better results in the fight against shadow economy, which also stimulated economic growth. However, in Nikolay Stoyanov’s view, this process would not continue with the same rate each year and the administration is not likely to improve its efficiency with this year’s pace. The growth of the national economy is mainly due to external factors, rather than to some specific measures undertaken by the country’s authorities, or to competitive advantages created within the companies themselves, Nikolay Stoyanov contends. Some of these positive economic factors will continue to influence Bulgaria’s economy in 2016. However, the combination of positive factors would not last for good. Meanwhile, the country’s economy may be affected by some unfavorable factors such as the weakening Chinese economy and possible downward processes in other developing world economies. On the other hand, the US Federal Reserve avoided hiking the interest rates, which are practically close to zero at present. However, bearing in mind the rapid development of the US economy, the interest rate increase in the USA can’t be delayed for too long. If Fed increases the interest rates, the investments in US assets will become more attractive. Moreover, the US dollar will rise even more, which would make Bulgaria’s import of goods traded for US Dollars more expensive. The third economic threat may come from some unsolved debt problems within the Eurozone, Nikolay Stoyanov said and added:

“In 2015 Bulgaria has had a series of opportunities to adapt to the current economic risks and use the positive factors that benefitted the development of the national economy.  Unfortunately, it failed to benefit from these factors. The budget performance in 2015 is better than any budget performance of the crisis years. However, the cabinet did not make any budget consolidation and at the end of the year the 2015 state budget would look the same as last year’s one. The positive effects in our economy were not used by the authorities to make any significant reforms either. This was proved in the recent weeks when the government withdrew its intentions to reduce benefits in the Interior Ministry.”

In Nikolay Stoyanov’s view, several factors would curb the opportunities for higher economic growth in 2016. On one hand, the absorption of EU funds in the beginning of the new programming period would be much lower, as compared to the absorption in the last years of the previous financial period. On the other hand, the recovery at the labor market is still very fragile and this factor is not likely to influence the local economy a lot. Lending would not also have a huge influence over the local economy, because of the forthcoming stress tests in Bulgaria’s banking sector in 2016 and the planned asset quality overview, which would take a lot of capacity and resource from the Bulgarian financial institutions.

English version: Kostadin Atanasov