Due to the economic shocks of the COVID-19 crisis, unemployment in Bulgaria in 2021 is expected to reach 7.4%. This is what Euler Hermes predicts in the regular report on the development of our country. This level is one of the highest in the region of Central and Eastern Europe, according to a comparative analysis of experts.
In 2022, with the expected gradual recovery of business, unemployment will be able to be reduced to 6.2%. This situation on the labor market will be reflected in a significant slowdown in wage growth in our country, as after the convincing increase in the previous two years by 11.5% and 7%, respectively, for 2021 is expected
tangible calming of the trend up to 3% growth, and for 2022 – 5%.
The survey, quoted by Pariteni.bg, also shows that the situation on the labor market in the Eurozone, where many Bulgarians are finding employment in recent years, is also not optimistic, with unemployment rates in a number of large countries such as France, Italy and Spain above in Central and Eastern Europe.
Analysts expect the permanently unemployed to reach 6.6 million in 2021, which is 38% more than before the COVID-19 crisis. A return to previous employment levels is generally in question.
On the one hand, it is linked to economic recovery, and according to experts, this is possible in Germany in the second half of 2022, and in most other countries only in 2023.
In the meantime, however, the new COVID-19 situation is also changing the rules of the labor market, and with the acceleration of digitalisation and automation in Europe, labor productivity is already significantly above pre-crisis levels. This, like the US model, calls into question the return of many people to work, especially in positions that do not require specific skills.
According to analysts, labor market processes will be a factor in limiting inflation in Bulgaria, with a forecast of 1.1% and 2.1% in 2021 and 2022. A slowdown in the growth of individual consumption is also expected, which in 2018 and 2019 was the main engine for growth of the Bulgarian economy.
Due to the COVID-19 crisis in 2020, however, there is a “freeze”, and for this and
next year the growth will be around 3%.
The experts also pay attention to the limited credit activity in our country, which almost did not increase in 2020 despite the low interest rates. The updated forecast of the insurer for the development of the Bulgarian economy in 2021 and 2022 is for GDP growth by 3.5% and 3.8% respectively after the contraction by nearly 5% in the crisis year 2020.
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