According to Eurostat economic forecasts, underlying economic trends are expected to remain largely unchanged in 2007 and 2008, with real GDP growing at around 6% in both years.

The catching-up of the Bulgarian economy will continue to be supported by strong investment growth, both to expand capacity and to upgrade the existing capital stock.

Moreover, absorption of EU Structural Funds starting in 2007 will give a boost to investment in public infrastructure. Noticeably higher real wage growth (backed by productivity gains) and sustained job creation will imply a gradual increase in disposable incomes and thus private consumption growth in the coming years.

At the same time, some fiscal expansion over the forecast period could lead to somewhat higher growth in public consumption than has been the case in 2006. Final demand will therefore continue to expand strongly at rates of around 9% per year.

In line with robust domestic demand, imports are expected to outpace exports despite a gradual strengthening of the export potential of the Bulgarian economy which is reflected in persistent gains in market shares.

The trade deficit is thus expected to widen to above 22% of GDP in 2007 and 2008. The current account deficit will further increase as a result of higher acceleration to 6½% at the end of the year. In 2007, repatriated profits weighing on the income balance. Stronger current and capital transfers from the EU will, however, imply that the net borrowing of the economy will stabilise at around 15½% of GDP over the forecast period.