Bulgaria's entry into the European Union on January will help sustain economic growth, outweighing a decline in industrial production at the start of the year, said Economy and Energy Minister Roumen Ovcharov.
The government will maintain its forecast for growth of more than 6% even after output in January fell a monthly 20.7% as production of chemicals, household equipment, power and heating declined, Ovcharov said in a March 9 interview in New York. „The economy is doing well,” said Ovcharov, 55. „The business climate is very good, expectations are high and I see no reasons to expect something bad.” January's decline in output was „strange and unexpected.”
Bulgaria, the EU's poorest country, fell behind other post-communist nations such as Poland and the Czech Republic in integrating its economy with Western Europe. The nation of 7.8 million needs to maintain fast economic growth to raise living standards while slowing inflation to meet euro-adoption terms. Pending membership of the EU helped attract a record €3.8 billion ($5 billion) of foreign direct investment last year, pushing economic growth for 2006 to 6.5%, Ovcharov said.
The €18.2 billion ($24 billion) Bulgarian economy grew 6.7% in the third quarter, driven by exports, a lending boom and investment from abroad. Inflation is the only euro-adoption requirement that Bulgaria did not meet. „We are working on this,” Ovcharov said. The government raised excise duties on alcohol, cigarettes and fuel in 2006 and 2007 to avoid price increases in the next two years, when the country will be tested for euro adoption.
A three-year government program, approved on March 1, aims to slow inflation to 3% in 2008 and 2.9% in 2009 from 7.2% in January. It also seeks to cut unemployment to 8.6% this year and 8% in 2009 from 9.7% in January. (Bloomberg)