The Bulgarian economy will grow by 2.9% this year, according to a winter forecast of the European Union, the European Commission says in its winter forecast. 

It predicts "robust growth amid ongoing fiscal consolidation" and "domestic demand continues to be the main growth driver".

"Private consumption was particularly buoyant, as also reflected in the strengthening of consumer confidence throughout 2016."

Fiscal consolidation continued in 2016, mainly due to higher tax revenues and reduced public investment. Risks to the growth outlook are tilted to the downside, but weaker import demand from main trading partners and surging oil prices may play a negative part, according to the forecast.

The Commission, however, also notes "political uncertainty related to the upcoming elections could also delay consumption and investment decisions".

Investment is expected to have slightly contracted in 2016 "mainly due to the slowdown in EU funds absorption", but will gain momentum, "with growth of 3.2% in 2017". The reason is that "the implementation of projects under the 2014-2020 EU programming period is expected to accelerate."

The Commission notes "income convergence with the EU is continuing at a slow pace".

For 2018, the national output will be up by 2.8%.

Inflation for this year is projected at 0.8%, up from -1.3% in 2016 and down compared to a projection of 1.2% for 2018.

Unemployment will shrink further from 7.7% last year to 7.1% in 2017 and 6.8% in 2017.

It calls for a faster progress with structural reforms as that "could lift the relatively low potential and real growth rates". 

Overall, the Commission notes all EU member states' economies "have proven resilient to global challenges last year".

"For the first time in almost a decade, the economies of all EU Member States are expected to grow throughout the entire forecasting period (2016, 2017 and 2018). However, the outlook is surrounded by higher-than-usual uncertainty."