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Bulgaria Country Report - Issue 1, 2016

  • ID: 3617502
  • Country Profile
  • February 2016
  • Region: Bulgaria
  • 23 Pages
  • Emerging Markets Direct
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Bulgaria's Business Confidence Strengthened in January, With the Combined Business Climate Indicator Rising 0.6 Points After a 0.7 Point Decline in December
This report covers the key macroeconomic, financial and political releases for Bulgaria for the period since January 15, 2016.

In the winter edition of its European Economic Forecast, the European Commission (EC) kept its projection for 2016 GDP growth in Bulgaria at 1.5%, unchanged from November.

Real GDP growth accelerated to 3.1% y/y in the fourth quarter of 2015 from 2.9% y/y in the previous three months, a seasonally-adjusted statistics office flash estimate showed on February 12.

The consumer confidence indicator rose to -28.7 in the three months to January, its highest level since April 2007.

Bulgaria's business confidence strengthened in January, with the combined business climate indicator rising 0.6 points after a 0.7 point decline in December. The industrial production growth decelerated to 1.6% y/y in December from 2.3% y/y in November.

The construction output increased by 0.7% y/y in December, reversing a 0.5% y/y drop in November. The retail sales (at constant prices) increased by 2.7% y/y in December, accelerating from a 2% y/y rise in November.

Key points:
- The CPI was unchanged y/y in January, after dropping 0.4% y/y in December
- Bulgaria reported a consolidated budget surplus of BGN952mn (€486.7mn) in January, equal to some 1.1% of projected GDP, preliminary data from the finance ministry showed
- The current account surplus declined 7% y/y to €789.5mn in January-November
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1. Executive Summary

2. Macroeconomic Overview
- EC keeps Bulgaria’s 2016 GDP growth forecast at 1.5%
- Bulgaria’s consumer confidence rises to best level since April 2007
- Bulgaria's long-term convergence interest rate edges up to 2.44% in January

3. Real Sector
3.1. GDP
- Bulgaria’s GDP growth speeds to 3.1% y/y in Q4 – flash estimate
3.2. Inflation
- Bulgaria’s CPI flat y/y, m/m in January
- Bulgaria’s annual PPI deflation softens to 3.2% in December
3.3 Industry and Trade
- Bulgaria’s business climate improves in January
- Bulgaria’s industrial output growth slows to 1.6% y/y in December
- Bulgaria's construction output edges up 0.7% y/y in December
- Bulgaria's building permits, new constructions rise y/y in Q4
- Bulgaria's retail sales growth speeds to 2.7% y/y in December
3.4. Labour Market
- Bulgaria's unemployment rate edges up to 10.2% in January – labour agency
- Bulgaria’s unemployment rate drops to 7.9% in Q4, labour force survey shows
- Bulgarian real gross wage growth slows to 8.7% y/y in December
3.5. Tourism
- Bulgaria’s accommodation revenue rises 2.9% y/y in December
- Foreign tourists to Bulgaria up 25.8% y/y in December

4. Fiscal Sector
- Bulgaria sees budget surplus of 1.1%/GDP in January, revises 2015 deficit to 2.9%/GDP
- EC sees no significant short-term risks of fiscal stress for Bulgaria
- Bulgaria’s fiscal reserve shrinks 20% in December
- Bulgaria’s government debt-to-GDP ratio remains 3rd lowest in EU in Q3
- Bulgaria sells €102mn of 3-year T-notes, yield drops
- Bulgaria sells €102mn of 10.5-year T-bonds, in line with target
- Bulgaria’s government debt rises 2.8% in 2015

5. Financial Intermediation
- Bulgarian banking sector profit rises 20% in 2015
- Bulgaria’s central bank verifies list of AQR providers for the banking system
- Bulgaria’s M3, domestic credit annual growth slows in December
- Bulgaria’s deposit, lending interest rates mixed in December

6. External Sector
- Bulgaria’s current account surplus narrows 7% y/y in January-November
- FDI in Bulgaria rise 20.6% y/y in January-November
- Bulgaria’s foreign trade gap shrinks 38% in 2015
- Bulgaria’s gross foreign debt drops 10.4% y/y in November
- Bulgaria's foreign reserves drop 3.5% in January

7. Politics
- Bulgaria nominates UNESCO head Bokova for new UN Secretary General
- EC criticises Bulgaria’s lack of progress on judicial reform

- Table 1 GDP, % y/y real (flash estimate)
- Table 2 CPI, % y/y
- Table 3 Domestic market PPI, % y/y
- Table 4 Bulgaria consolidated budget, BGNmn
- Table 5 Fiscal reserve, BGNmn
- Table 6 Government debt, €mn
- Table 7 Commercial banks, AQR providers
- Table 8 Money supply, domestic credit, loans
- Table 9 Current account, €mn
- Table 10 Foreign trade, FOB/FOB, BGNmn
- Table 11 Gross external debt, €mn

- Figure 1 Consumer confidence indicator
- Figure 2 Long-term convergence interest rate
- Figure 3 Bulgaria CPI, PPI
- Figure 4 Industrial output
- Figure 5 Construction output
- Figure 6 Retail sales
- Figure 7 Unemployment rate, labour force survey
- Figure 8 Average interest rates on new euro loans
- Figure 9 Foreign trade
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Note: Product cover images may vary from those shown