Bulgaria's economic growth is going to slow down to two percent in 2009, according to the latest forecast of International Monetary Fund (IMF), local BTA reported Monday, citing Bas Bakker, head of the IMF mission for Bulgaria.
The IMF data, which was released by Bakker in a news conference held Monday, suggest that Bulgaria's economy was developing successfully in the first three quarters of 2008 but the effects of the global financial crisis were already visible in the last quarter of the year. The current account deficit is projected to decline from 24 percent to 15 percent of GDP in 2009.
The IMF representative also predicts a 4.5 percent inflation in Bulgaria in 2008 thanks to the decreasing food prices on the global markets.
The IMF believes the global economic slowdown would have two consequences for Bulgaria. First, it would reduce the foreign demand for Bulgarian goods and services, and second, it would reduce the foreign direct investments to the country.
The fund also notes that the Bulgarian economy has strong positions, which give the country the opportunity to withstand the challenges ensuing from the global crunch.
Bulgaria's public finances are found to be in a good condition, and its budget surplus is among the highest in Europe. The Bulgarian government and the Bulgarian National Bank have sufficient currency reserves and significant fiscal buffers.
The IMF mission for Bulgaria recommends that the wage growth should be slowed down because this could affect the country's competitiveness.
In a difficult external environment, it will be essential that public policy is focused on maintaining public trust, and continue the strong policies of recent years, Bakker stressed.
Fiscal surpluses remain an important support for the currency board, and also essential to preserve balances in the fiscal reserve account -- a necessary shield, if problems were to emerge.