Macroeconomic Forecast Bulgaria

Bulgaria's retail sales index continues to slump, contracting by 5.2% y-o-y in October - the third consecutive year-on-year contraction. This tallies with our recent downwards revision of our 2012 private consumption growth forecast to 0.9% y-o-y in 2012 and 1.5% in 2013 respectively, from 1.8% and 3.0% previously. As economic activity begins to slow we expect labour market conditions to deteriorate in the coming months, forecasting unemployment to tick back up to 11% in 2012 (from 10.5% previously), and we forecast individual consumption to contribute 0.7 percentage points of growth in 2012.

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