The Bulgarian economy will be in the depths of a recession in the next two years with dwindling capital inflows and consumption squeezed by the rising jobless rate, according to Michal Dybula, BNP Paribas economist, a co-author of a report on 2009 global economic outlook.

Neighbouring Romania is also in for big trouble with gross domestic product (GDP) set to drop -0.6% next year, according to Dybula. The Bulgarian economy will contract -1.2% in 2009 and -0.3% in 2010. Economic growth will slow down to 2.2% in Q4 2009 from 4.4% in the final quarter of 2008.

The Bulgarian economy is the most rickety across all Central and Eastern Europe, according to Dybula, as the wide current account gap is the major challenge before Bulgaria in the face of slowing foreign capital inflows.

The expected protracted recession in the Euro-Zone will freeze cash flows to the region and slash jobs of Bulgarian and Romanian migrants making it harder to send money back home and rising domestic unemployment if they return.