SOFIA, Reuters – Bulgaria’s economic recovery is predicted to be a success with a growth of 4% in 2017 and an acceleration to 4.9% in 2022 according to the autumn macroeconomic forecast released by the finance ministry on Wednesday.

When the coronavirus pandemic struck jobs and businesses, the economy of small and open countries contracted by 4.2%.

It was informed by the ministry that strong domestic demand during 2021’s first half has caused it to revise its estimate for GDP growth, which had been 3.5%.

It stated that strong public and private investments, supported by the expected large inflows of funds from the European Union’s coronavirus rehabilitation fund, will boost growth further in 2022.

According to the ministry, high oil prices and the economic recovery are likely to increase inflation by 3.8% to 2021. This should decrease to 2.2% to 2022.

Bulgaria’s lev currency is linked to the euro in a currency board arrangement. The central bank cannot set interest rates, and fiscal policy remains the only tool that can influence the economy.

Balkan countries increased spending to protect pensioners and businesses from the impact of the coronavirus crises, but they also reduced the target fiscal deficit to 3.6% GDP.

According to the ministry, a pandemic new wave that causes restrictions or fails to use the EU Recovery Funds efficiently could pose threats to the outlook.

Bulgaria is currently facing third round of general elections in November. It has yet to submit its plan for using more than 6 billion euro in EU Recovery Grants.