SOFIA (AFP) - Bulgaria must increase the productivity and competitiveness of its economy to avoid being left behind the rest of Europe after its hoped-for accession to the European Union in 2007, a report warned yesterday.

“If Bulgaria continues to lag behind the European Union member states in terms of the productivity, technological progress and innovativeness of its economy, it will stay for good at the periphery of Europe,” said the report commissioned by President Georgy Parvanov to outline the challenges ahead of Bulgaria’s economy until 2010.

Bulgaria’s gross domestic product per capita amounts to a mere 26 percent of the average in the first 15 EU member states.

Productivity is at 30 percent of this average and prices at 40 percent.

In the last five years the EU has registered an average growth rate of 1.8 percent while Bulgaria has grown by 4.8 percent.

But due to its backwardness, Bulgaria has to continue to develop faster than the EU member states in order to catch up.

The report recommended that Bulgarian companies increase their cooperation with companies from the EU in order to avoid “a marginalization” of Bulgaria’s economy.

“The enormous social and economic discrepancies” between Bulgaria and the EU will spur tension in the process of integration,” economy experts warned.

“The difference between people’s incomes in Bulgaria and the EU corresponds to the difference in the competitiveness of the two economies,” the experts said.

The average monthly income in Bulgaria in 2003 amounted to 94 euros ($123), 10 times lower than in the EU.

Purchasing power in Bulgaria has barely reached 43 percent of the level in 1990, the first year after the fall of communism, the report stated.

Unemployment in Bulgaria stands at 13.6 percent compared to 8 percent on average in the 15 older EU member states.

If Bulgaria did not bring its productivity and income levels closer to the European averages, “the economic policy of the Union will not take into account Bulgaria’s particularities, and this could have disastrous consequences,” the report said.