Fitch rating Confirmed Bulgariahas a long-term credit rating of BBB, with a favorable outlook. The agency believes that this rating is supported by the country's strong external and fiscal position relative to similarly rated countries, as well as a stable political framework provided by its membership of the European Union and a permanent monetary commission regime. He emphasized that there is.
However, Fitch noted that low labor productivity and unfavorable demographic trends are negatively impacting potential growth and the long-term stability of government finances. A positive outlook indicates that Bulgariaprospects for participation in euro areawhich is expected to further strengthen the country's external position indicators. According to Fitch, there is strong political commitment to adopting the euro at both national and European levels.
Bulgaria With the exception of price stability, almost all of the nominal convergence criteria for the introduction of the euro have been met. The country's inflation rate has continued to decline, the gap between its annual average inflation rate and the average inflation rate of the three best-performing EU member states has narrowed, and it is moving closer to meeting price stability requirements. Fitch expects average annual inflation to be 3% in 2024, 3.5% in 2025, and 3.1% in 2026.
Regarding economic growth, Fitch forecasts GDP growth of 2.0% in 2024, higher than the National Institute for Statistics' revised forecast of 1.9% for 2023. This growth is expected to be driven by stable consumer spending and continued investment activity, despite heightened political uncertainty and delays in the implementation of the national recovery plan.
The agency predicts that GDP growth will rise to 2.5% in 2025 and 2.7% in 2026. The general government deficit is also expected to increase from 1.9% in 2023 to 2.8% of GDP in 2024 due to increases in compensation and welfare costs.
Factors that may lead to an upgrade BulgariaAssessment includes progress toward euro area Confirming that standards are met and clarifying the schedule for the introduction of the euro. Furthermore, the growth potential could be improved by implementing structural and management reforms to strengthen the business environment and optimize the use of EU funds.
On the other hand, if you do not participate, euro area Ratings may be downgraded if convergence criteria are not met or if economic growth prospects decline.
