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IntelliNews - Bulgaria Country Report - Issue 4 - 2012
Emerging Markets Direct, May 2012, Pages: 16
The IntelliNews Bulgaria Country Report is a monthly report, covering the major macroeconomic indicators and trends in Bulgaria, as well as important political developments. Prepared by local analysts, it provides the most accurate data, updated regularly according to the data changes noted by the whole range of statistics sources. It will save the time you would need to track the figures and sources independently and will provide you with thorough analysis.
The IMF downgraded its projection for Bulgaria's economic growth to 0.8% in 2012. GDP growth is expected to accelerate to 1.5% in 2013. Bulgaria's economy will grow below the average for emerging Europe in both 2012 and 2013 (1.9% and 2.9%, respectively), according to the IMF.
The IMF's forecast is more conservative compared to the one released by Bulgaria's finance ministry. In its updated convergence programme, the government expects 1.4% economic growth in 2012, driven by improved external environment in H2 and gradual recovery in domestic demand. The economy is seen to grow by 2.5% in 2013, according to the finance ministry's projection.
Many indicators, released over the past month, indicate a slowdown in the economic activity. Such were the data for a deceleration of CPI and PPI inflation in March, drops in industrial production and retail sales in February, a drop of building permits in Q1, an increase in the unemployment rate in March, and a decrease in exports in Jan-Feb. On the positive side, the composite business sentiment indicator increased by 3.2pps in monthly terms to 18.53 in April, recovering to its levels from August and September 2011.
The general budget posted a deficit of BGN 687.2mn (EUR 351.4mn) in the first quarter of 2012, down by 7.4% y/y. The current account also netted a deficit of EUR 388.2mn in the first two months of the year, compared to a surplus of EUR 11.1mn a year earlier. Net FDI flows were positive at EUR 67.4mn in Jan-Feb but dropped by 77.5% as compared to a year earlier.
EXECUTIVE SUMMARY
MACROECONOMIC OVERVIEW
IMF lowers Bulgaria's GDP growth forecast to 0.8% in 2012.
IMF mission to visit Bulgaria in May 2 - 9.
REAL SECTOR
1. GDP
Bulgaria's economy to grow between 1.4% - 4% in 2012-2015 - MinFin.
Bulgaria's economy will grow by 1.2% in 2012 - Citigroup.
2. Inflation
Bulgaria's consumer inflation slows to 1.7% y/y in Mar 2012.
Bulgaria's industrial PPI inflation slows to 4.5% y/y in March 2012.
3. Industry and Trade
Business sentiment in Bulgaria continues improving in April 2012.
Bulgaria's industrial production falls 4% y/y Feb 2012.
Bulgaria's retail sales down 2.4% y/y in Feb.
Building permits number in Bulgaria down 1.3% y/y in Q1 2012.
4. Labour Market
Bulgaria's unemployment rate rises to 12.6% in March, above EU level.
Bulgaria with lowest labour cost per hour in EU - Eurostat.
5. Tourism
Foreign tourist arrivals in Bulgaria up 0.4% y/y in March 2012.
FISCAL SECTOR
Bulgaria's general budget deficit narrows by 7.4% y/y in Q1 2012.
Bulgaria's general government gap shrinks to 2.1% of GDP in 2011 - Eurostat.
Bulgaria's Silver Fund to be invested in special issues of govt bonds - FinMin.
Bulgarian govt targets 1.3% of GDP deficit in 2013, balanced budget in 2015.
Bulgaria selects manager for Eurobond issue.
Bulgaria sells 2-year T-notes at 2.2% average yield, raises EUR 17.9mn.
Bulgaria's finance ministry rejects all bids in 5-year T-bond issue.
Bulgaria's benchmark interest rate falls to 3-year low level in March.
Bulgaria's public debt up 14% y/y to EUR 5.97bn at end-Feb 2012.
FINANCIAL INTERMEDIATION
Assets of financial institutions in Bulgaria increase 5.9% y/y at end-Mar 2012.
Bulgaria's central bank cuts base interest rate to record low of 0.14% in May.
Banks in Bulgaria have adequate level of provisions, capital - c-bank governor.
Bulgaria's general insurance market shrinks in Jan-Feb.
EXTERNAL SECTOR
Bulgaria's CA gap widens to 1% of GDP in Jan-Feb 2012.
Net FDI inflows in Bulgaria drop 77.5% y/y to EUR 67.4mn in Jan-Feb 2012.
Bulgaria's foreign trade gap widens, exports decline 6.1% y/y in Jan-Feb 2012.
Bulgaria's real effective exchange rate keeps falling in Feb.
Bulgaria's foreign debt drops 5% y/y to EUR 35.1bn at end-March 2012.
Bulgaria's foreign reserves up 3.2% m/m in March 2012.
Table 1 Forecast for Bulgaria (in %)
Table 2 Bulgaria general budget, BGN mn
Table 3 Bulgaria balance of payments
Figure 1 Bulgaria CPI, PPI
Figure 2 Bulgaria business climate
Figure 3 Bulgaria long-term convergence interest rate
Figure 4 Bulgaria base interest rate
Figure 5 Bulgaria CA, FDI
Figure 6 Bulgaria external liquidity
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