The escalation of the conflict in the Middle East is having a negative impact on the Bulgarian economy, mainly due to the increase in energy prices. This was commented on by the chief economist at the Institute for Market Economics Lachezar Bogdanov on Nova TV.
According to him, the net effect on the economy is negative, as higher fuel prices burden businesses and households. At the same time, however, the state budget may report higher revenues due to more expensive energy resources.
According to him, the positive side is that the Bulgarian economy is gradually becoming richer and its resilience to such energy shocks is increasing.
The economist warned that if high fuel prices are maintained, budget revenues will likely increase. However, if the conflict drags on, there is a risk of a global recession, which would inevitably affect Bulgaria. According to Bogdanov, both business and citizens must accept that energy shocks periodically occur in the economy.
„There are moments of cheap fuel and moments of more expensive fuel. This also happens in the global economy“, he said.
For now, however, the expert sees no grounds for introducing direct fiscal measures and support from the budget. According to him, such actions would be justified only in the event of a significantly stronger price shock. He still believes that the state should be prepared for a more negative scenario in which the price of oil increases significantly - for example, by 50 or even 100 percent.
The economist also commented on the topic of fiscal stability. According to him, if Bulgaria wants to keep the deficit within acceptable limits and not increase the state debt excessively, the next government will have to limit the growth rate of public spending.
“If we want to have fiscal stability and the deficit to be within certain limits, whoever governs after May will have to rein in the growth of public spending“, Bogdanov is categorical.