Bulgaria: GDP growth records best result since Q1 2023 in Q2
GDP reading: GDP growth gathered momentum to 2.1% year on year in the second quarter, up from 1.9% in the first quarter and marking the fastest expansion since Q1 2023. On a seasonally adjusted quarter-on-quarter basis, economic growth was steady at Q1’s 0.5% in Q2, marking the joint-strongest expansion since Q4 2022.
Improvement driven by public spending: Looking at the details of the release, government consumption accelerated to a 2.6% expansion in Q2 (Q1: +1.5% yoy). Less positively, household spending growth eased to 3.0% in the second quarter, which was below the first quarter’s 4.0% expansion. Additionally, fixed investment grew by a weaker 3.6% in Q2, down from Q1’s 8.7% rise.
On the external front, exports of goods and services fell by 0.3% in the second quarter, the least in over a year (Q1: -2.1% yoy). In addition, imports of goods and services rebounded, growing 4.9% in Q2 (Q1: -3.7% yoy), marking the strongest reading since Q4 2022.
Economy to benefit from broad-based improvement in 2024: Looking ahead, our Consensus is for growth to be strengthening from H1 levels in H2. As a result, 2024’s full-year growth is forecast above 2023’s rate; rising EU demand and fund inflows will boost public spending, fixed investment and exports. Slower-than-expected EU funds absorption and deepening political instability are downside risks, while stronger-than-expected EU activity is an upside risk.