ECONOMY

Bulgaria cuts growth forecast, ups estimate for C/A deficit

SOFIA (Reuters) – Bulgaria’s Finance Ministry cut its 2006 economic growth forecast yesterday to 5.3 percent from a previous 5.5 percent, citing a deceleration in demand and lower-than-expected investment due to accrued stockpiles. The ministry also raised its estimate for the end-2006 current account deficit to 12.4 percent of gross domestic product from an earlier forecast of 11.3 percent. «Household consumption growth is expected to slow, mainly due to central bank steps to limit credit lending,» the ministry said. «The government’s commitment to shoot for a budget surplus of 3 percent of GDP will also decrease consumption.» The data, published on the ministry’s website, were part of a 2007-2009 budget forecast approved by the government. The Cabinet presented part of the forecast document last week but did not include the 2006 data at that time. The EU aspirant also raised its year-end headline inflation outlook to 6.9 percent from a previous 6.4 percent, saying the one-off effect from excise duty hikes on cigarettes and alcohol this year and regulated energy price rises was bigger than initially expected. The ministry also forecast foreign direct investment of 2.4 billion euros this year, or around 9.9 percent of GDP, up from 1.8 billion in 2005. That should to some extent help counterbalance the wide external gap, which hit a record 11.8 percent of GDP last year and has forced the government to keep to one of the tightest fiscal policies in Europe.