Most new European Union member states, Bulgaria included, have weathered well the implications from the global financial crisis but should beware of a belated impact in the latter half of the year, the chief economist at the World Bank Ivailo Izvorski told reporters at the June 18 presentation of the lender's semi-annual report on the progress of countries from EU's newest member state, Malta and Cyprus excluded.

High inflation, the increase in the current account deficit and the debt burden, the tightening of loans and the slowdown of economic growth of euro-zone countries all pose serious risks for the group of EU member states, which the bank calls EU10, the bank's analysts said.

The impact of the global financial crisis on EU member states is insignificant but some belated effects could eat a portion of the countries’ economic growth.

The World Bank expects EU10 economies to grow by five per cent on average this year, as opposed to an average of 6.2 per cent in 2007. The cut in GDP growth in the euro-zone by one percentage point has led to the decline in EU newcomers growth by 0.5-1 per cent, Izvorski said.

Bulgaria is in a relatively favourable position with the largest economic growth in Central and Eastern Europe after achieving a record seven per cent GDP growth for the first quarter of 2008.

The bank's analysts expect Bulgaria to keep GDP growth on par with 2007 at six per cent. To compare, GDP growth in the Baltic states – Estonia, Lithuania, Latvia – dropped sharply, that of Latvia for example plunging to below four per cent in January-March 2008, as opposed to 11 per cent growth in the same period of a year ago.

The bank has also praised Bulgaria for its strict fiscal policy and its budget surplus, in particular.

Despite the good performance, the country still needs to work on the main challenges to economy – high inflation and current account gap. These challenges are valid for almost all countries in the region. Growing foreign debt burden also poses risks to economic stability, the WB said.

Inflation in Bulgaria reached a 10-year high in May to 15 per cent, according to data of the National Statistical Institute. Current account deficit came in at 6.175 billion euro or 21.6 per cent of GDP in what surpassed analysts and governmental expectations.