Trade and growth in Bulgaria and the wider region could suffer from higher risks for ships in the Black Sea and costlier insurance, a senior IMF official has said. Mateusz Szczurek, head of the International Monetary Fund's European Department, made the comment in reply to a question from BTA after the attacks in Bulgaria's exclusive economic zone in the Black Sea.
The effect cannot be measured yet, but it may be felt in the short term, Szczurek told an IMF briefing on the regional economic outlook for Europe. He said the same is happening in the Middle East.
In its October forecast, the fund cut its 2026 growth estimate for Bulgaria's economy to 2.6%. In April it expected 2.8%. For 2027, it raised the forecast to 2.7% from 2.5%. The data is as of 30 September, before the attacks on commercial ships.
Szczurek also spoke about inflation in Bulgaria nine months after it joined the euro area. Prices are rising fast because of costlier energy, strong domestic demand, fast growth in wages and loans, high government spending and a large budget deficit.
Bulgaria also has high energy intensity, meaning its economy uses a lot of energy to make its output. Szczurek said it has one of the highest levels in the EU. This is why pricier energy hits Bulgarian firms harder than those in other countries.
The euro affects the price level, not inflation. In practice, a change of currency can push up some prices once, but it does not make prices rise year after year. The effect is small next to the other causes and happens only once, Szczurek said.
For inflation to fall to the target and stay there, the economy has to cool and imbalances have to shrink, he said.
Wages in a number of countries in Central and Southern Europe are rising faster than productivity, or the output of each worker, Szczurek said. These countries are losing competitiveness, and their past growth model is being undermined. Helge Berger, deputy director of the European Department, said it is better for growth to come from higher productivity than from excess domestic demand.
The fund expects the economy of Central, Eastern and South-Eastern Europe as a whole to grow by 2.2% in 2026 and to pick up moderately in 2027. Over the past two decades, average growth in the region has been about 3.5%.
Szczurek said these countries face extra problems: tougher competition in the markets where they export, a smaller share of global foreign direct investment and weaker support from EU funds. He sees no clear line between Western and Central Europe in the outlook, and said each country should be looked at on its own.
The IMF expects growth of 1.2% in 2026 and 1.1% in 2027 for the euro area excluding Ireland. Inflation in the euro area will stay above target until 2028. In some countries of Central and South-Eastern Europe it will stay there longer.
Europe is bearing the effects of the war in Ukraine and the long conflict in the Middle East, Szczurek said. The first blow was milder than expected, partly because of the shift to clean energy and lower imports of fossil fuels. High energy prices will still weigh on the economy, and uncertainty is high.
Central banks must act with care, and governments must not spend in ways that add to inflation, Szczurek said. He said Europe should seek growth through reforms that help innovation and let firms grow, and that make economies more stable.
The fund's priorities are to continue the shift to clean energy, deepen the EU single market and push national reforms in each country. Closer links between markets for goods, services, labour, capital and energy will raise productivity and let Europeans' savings be put to better use, Szczurek said. Protectionism and broad industrial policy buy time, but do not guarantee prosperity.
The IMF's World Economic Outlook came out earlier this week. It cut the 2026 forecast for the Middle East and Central Asia to a contraction of 0.3%. In July the fund expected growth of 0.7% there.
For Germany, the IMF raised its 2026 forecast by 0.6 percentage points to 1.3%, citing stronger exports, more public investment and defence spending. The country's potential growth, or how fast its economy can grow without overheating, will be about 0.6% in the medium term.
Oya Celasun, also a deputy director of the European Department, said Germany's weak potential comes from an ageing population, a smaller workforce and weak productivity. She said the country needs more child and elder care, investment in infrastructure and less red tape. Carmaking and machinery are under pressure from stronger foreign competition. Germany can help the EU by backing a deeper single market, labour mobility, a common market for savings and investment, and linked energy markets.
For France, the fund cut its forecast for 2026 from 0.6% to 0.4%, and for 2027 from 0.9% to 0.7%. Szczurek said the country has problems at home and an unfavourable outside environment, and that a heatwave and drought have hit the economy. Political uncertainty is weighing on investment forecasts. Market trust in public finances depends on passing the 2027 budget on time, he said.
The IMF raised its 2026 forecast for the UK to 1.3% from 1.0%. The fund backs trade as a driver of growth, and the EU is the UK's biggest trading partner, Szczurek said. Whether the UK rejoins the EU is its own political choice.
Berger noted the strong first half for the British economy. The weak spot is the labour market, where young people are hit harder, but the problem should not be overstated. Skills, labour policies, vocational training and apprenticeships matter, he said.
Taxes in the UK are about 40% of GDP, which is high by the country's past levels. Berger said the budget has room for more revenue from a modernised property tax and from a wider base for consumption taxes such as VAT. The IMF is against higher taxes on labour. Spending needs to be more efficient and welfare better targeted.
On 9 October we reported that the Bulgarian Association of Sea Captains called on the state for urgent, coordinated action to protect ships near Burgas and Varna. The captains say the attacks, floating mines and drones directly affect shipping to and from Bulgarian ports.
Asked about the tax on bank profits, Berger said taxes on labour are a bigger problem for labour supply than taxes on capital. Investment can be financed with equity and with reinvested profit, he added.