Bulgaria is showing significant progress towards meeting the criteria for joining the eurozone, according to recent data. November statistics from the National Statistical Institute reveal that monthly inflation stood at 0.6%, while annual inflation reached 2.1%. Despite a slight acceleration in annual inflation, the monthly inflation rate has grown more slowly compared to October.
Economist Yulian Voinov highlighted that Bulgaria was close to meeting the inflation criteria for eurozone accession, with a margin of just 0.4% above the threshold, when compared to the three countries with the lowest inflation rates. He pointed out that when looking at Ireland, which had an inflation rate of 0.5%, Bulgaria would already meet the criterion. Voinov also noted that inflation in Bulgaria was expected to continue to decrease in the medium term, with a forecast of around 2%. However, he pointed out that the price of dairy products in Bulgaria was 15% higher than the European average, although this did not pose a major issue for meeting the criteria. The potential challenge, according to Voinov, lies in the budget deficit, which could hinder the country’s ability to fulfill the requirements, rather than the price levels of specific goods. On a positive note, Voinov observed that Bulgaria’s incomes were growing faster than inflation, which was increasing the purchasing power of the population.
Economist Prof. Garabed Minasyan offered a contrasting view, suggesting that Bulgaria’s path to joining the eurozone might not be as straightforward. He noted that the country’s relatively low price levels compared to the EU average were not sustainable in the long term, especially given the goal of adopting the euro. Minasyan explained that achieving this goal with a fixed exchange rate would require a period of higher inflation, a process that was inevitable. He pointed out that inflation was particularly high in certain sectors, with public catering experiencing an annual price increase of around 7%, while food goods and services saw a growth of 4%. On the other hand, non-food goods experienced a decrease in value. Minasyan cautioned that, while Bulgaria was working to meet the monetary criteria for eurozone membership, it remained significantly behind in terms of real convergence with EU and eurozone member states, suggesting that joining the eurozone soon might not be advisable.
Both economists agree that Bulgaria’s economic indicators are improving, but they emphasize different challenges that could impact the country’s ability to fully meet all eurozone criteria. (Novinite)