Analyzing the latest NSI and Eurostat data, UBB commented on key trends in the country's economy.

The bank's analysts report that in the third quarter of 2023 the Bulgarian economy grew by 1.7% actually on an annual basis.

"Growth was expected to be lower than in the first and second quarters due to a materialising downward trend in the euro area. The largest trading partner, Germany, fell into a technical recession, which had an impact with a slight slowdown in economic activity in the quarter and in Bulgaria. In our opinion, the trend for slower growth will continue in the fourth quarter. Thus, for the whole year, we expect an economic growth of 1.9% in Bulgaria", commented UBB's Chief Economist Dr. Emil Kalchev.

In the third quarter, economic activity moved by final consumption, which accelerated significantly - by 6.1% compared to the same quarter of 2022 (relative share of 77.7% of GDP), virtually unaffected by the still high inflation. Against this background, investment grew very rapidly, reporting a real growth of 9.4% (18.4% relative share). Net exports for the quarter were negative, with an annual decline in exports by -7.8% and a contraction in imports by -7.5%.

"The economic outlook for 2024 will continue to depend on developments in the euro area, as well as the impact of specific national factors. The most likely scenario for the euro area is a so-called soft landing, or falling inflation to 2.9% with weak GDP growth of around 0.5% for 2024. Our expectations are that growth will accelerate to 2.3% with falling average inflation to 5%," Kalchev predicted.

Inflation continued to slow down in October. Thus, harmonized inflation reached 5.9% (compared to October last year). In turn, underlying inflation (excluding food and fuel) continued to slow to 7.0% in October.

"Fuel dropped out of the three industries with the fastest rising prices in May, followed by food in October. With the fastest rising prices in October turned out to be: healthcare, restaurants and hotels, and the so-called. other services," adds Dr. Kalchev.

The labour market remained stable, with demand for qualified personnel outperforming supply. Harmonized unemployment at the end of the third quarter remained at 4.5%, i.e. close to natural unemployment.

"For its part, the average wage, after some slowdown in growth of 12.7% in June, again accelerated to +15.9% by September. Thus, it again outpaces inflation," concluded Emil Kalchev.

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