A serious decrease in economic growth in Europe is expected in 2023. In Central and Eastern Europe, GDP will experience the most significant decline - only 0.8% compared to 4.0% in 2022. In Bulgaria, it is expected to be 1.5%.
This became clear during the Eighth Annual Risk Management Conference, organized by Koface Bulgaria, which took place on April 26 at the Hilton Hotel. The theme of the event was "Stability in Turbulent Times", and it discussed current business risks and possible solutions for dealing with them in an unstable economic and political environment.
Participants in the conference were representatives of Bulgarian and foreign companies, as well as leading financiers, who shared their point of view on the dynamic world situation.
According to Koface analysis, the annual forecast for economic growth in North-West Europe is 0.4% compared to 2.5% in 2022. A deterioration is also expected in the US, and a positive trend is observed in the Chinese economy.
The growth of the World Gross Domestic Product is predicted to be only 1.9% compared to 3% in 2022. Plamen Dimitrov, manager of Koface Bulgaria and the chief economist of Koface for Central and Eastern Europe - Gregorj Šilevich, reviewed the country and sector risks around the world. According to Šilevich, the economies are starting to recover from the middle of 2022, but prices remain at high levels. A more serious concern is core inflation, which excludes energy and food prices.
In his analysis, Plamen Dimitrov notes that the most promising sectors worldwide are pharmaceuticals and information technologies, while the riskiest remain construction, transport and textiles - clothing. Both experts shared that most countries are seeing an increase in the number of companies filing for bankruptcy, but statistics change every year due to changes in countries' legal frameworks. Bulgarian companies that went bankrupt in 2022 increased by 3.1% compared to 2021 – from 516 to 532. Clearer information shows the trend in the general report, which indicates that the total number of corporate insolvency proceedings in CEE countries covered by Koface analysis increased from 25,917 in 2021 to 36,090 in 2022, i.e. with 39.3%. Experts report such growth mostly due to the help of the anti-crisis measures along with COVID-19.
According to Koface calculations, the labor shortage is keeping wage growth in Bulgaria low anyway. The latest figures for October 2022 point to an annual increase of around 3%.
The political scientist Parvan Simeonov highlighted the long-term risks facing the country, including the demographic situation, poverty, social stratification, ghettoization, and the problems of the pension system. According to him, the biggest political risk facing the country is the alienation between the elite and the people, which creates populism today, and our country must strengthen its
Euro-Atlantic identity. The executive director of Gallup International also said that for the first time there is a wavering of people about the benefits of EU membership.
Among the topics discussed were expectations for the introduction of the euro in Bulgaria and inflation. According to Koface data presented at the risk conference earlier, the overall price increase in Bulgaria will drop to 11.2% annual average percentage value, compared to the reported 15.3% for the past year.
The European Central Bank is expected to increase interest rates from 3.5 - 4.0% by the end of 2023.