European Union autumn forecast bumps up Bulgaria 2017 growth estimate to 3.9%


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The European Commission (EC) increased the forecast of this year's GDP growth by 0.7 percentage point to 4.2 percent.

Regarding potential risks for Bulgaria's economy, the EC said that "a slower utilisation of European Union funds could moderate the contribution of investment to growth", while increased tax revenues could create pressure for "additional wage increases, as well as for public investment fully outside the European Union funds programmes". Nonetheless, this was bigger than the 1.8 percent forecast previously.

However, in view of Malta's openness to trade (nominal exports and imports combined to reach 270% of GDP in 2016) any volatility in Malta's main exporting sectors would have a disproportionately large impact on real GDP growth.

The Commission also said that the French deficit this year would fall under the EU's limit of 3.0 percent of annual GDP.

The EC said growth this year is supported by private consumption and rebounding investment.

The closure of the second review in June 2017, together with the stronger-than-expected growth in the euro area and a favourable tourist season, are expected to strengthen the economy in the remainder of the year.

In 2017, the government balance is projected to remain in surplus, at 0.9% of GDP.

Tax revenues in 2018 are predicted to continue growing due strong to real GDP growth, despite a reduction in taxation. The euro zone, meanwhile, is expected to grow by 1.7 per cent this year, an increase of 0.1 percentage points compared to the previous estimate.

"The government's fiscal stimulus this year - supported by stronger exports, a significantly depreciated Turkish lira in comparison with last year and a strong boost from public finances and other policy incentives, meant to restore confidence in the Turkish economy", the bloc's economic report said.

The commission said the eurozone had enjoyed its best year since the start of the financial crisis a decade ago, having shaken off the debt crisis that gripped the region a couple of years ago. He added that the investment in the European Union is "picking up" and that confidence in economy has "considerably brightened".

Job creation has been sustained and labour market conditions are set to benefit from the domestic-demand driven expansion, moderate wage growth, and structural reforms implemented in some Member States. Unemployment in the euro area is expected to average 9.1% this year, its lowest level since 2009, as the total number of people employed climbs to a record high. High households' indebtedness and increasing debt burdens, could also affect consumption growth.

The current account surplus is forecast to be close to 10% of GDP for 2017, pushed by strong growth in exports, especially service, and a drop in imports related to the contraction in investment.

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