Bulgarian Think Tank Forecasts 12% Inflation for 2007

26.08.2008

Annual inflation for 2007 will reach 12%, exceeding the cabinet's updated estimates by four percentage points, Bulgarian economic think tank Centre for Economic Development (CED) forecast on Thursday.

Bulgaria's government initially targeted annual inflation of 4,4% this year, bringing it close to the requirements for joining the euro waiting room ERM-2 and adopting the common European currency.

But it has had to scrap that estimate since then, after a long draught has pushed food prices higher in the summer, while the planned fuel and utility price hikes added to the figure.

Year-on-year inflation at the end of September rose to 13.1% from 12% the previous month, while cumulative inflation for the first nine months of the year was 8,9%, compared to 6,3% at end-August, according to Bulgaria's statistics board NSI.

It is due to release ten-month inflation figures next week.

CED also forecast real economic growth in the country will reach 6,5% for the year, with the industrial and services sectors leading the way.

Bulgaria's economy grew by 6,4% in the first half of the year, to BGN 24,47 B, according to NSI data, raising hopes that it would finally buck the downward trend of recent years.

Last year Bulgaria's economy grew by 6,1%, a touch slower than the 6,2% in 2005, and well below the 6,5% official target. In nominal terms, Bulgaria's GDP for 2006 was BGN 49,1 B, or EUR 25,1 B.

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