SOFIA – The Russian invasion of Ukraine and sanctions against Russia are likely to put the brakes on Bulgaria’s economic growth this year and keep annual inflation in double digits, the finance ministry’s macroeconomic forecast showed on Tuesday.
The Balkan country almost halved its 2022 growth forecast to 2.6% from 4.8% and saw annual average inflation under the EU-harmonised index at 10.4% from a previous 5.6% this year, the forecast showed.
“The military conflict led to an increase of the prices of energy and key raw materials, which will have a negative impact on households purchasing power,” the ministry said in a statement.
The invasion and sanctions on Russia are expected to disrupt global trade and supply chains that will harm Bulgarian exports and investments in the country, the ministry said.
The country’s tourism revenue will also be seriously impacted as Russian and Ukrainian holidaymakers are not likely to visit its Black Sea summer resorts this year.
The finance ministry sees economic growth slowly recovering to 2.8% in 2023. Bulgaria’s economy expanded by 4.2% last year.
The ministry expects consumer prices to continue surging through the third quarter and to slow in the last, bringing year-end inflation to 10%, which should further drop to 3.1% in 2023.
(Reporting by Tsvetelia Tsolova; Editing by Hugh Lawson and Bernadette Baum)