UniCredit Forecasts 2011 Recovery for Bulgarian Economy

Business | April 19, 2010, Monday // 13:42|  views

The Bulgarian CEO of Italian-owned UniCredit Bulbank, Levon Hampartzumyan. Photo by BGNES

Recession in Bulgaria is to continue at least until the end of 2010, analysts from the Italian UniCredit bank, which owns the Bulgarian Bulbank, forecast.

Bulgaria's recovery will be seen at the end of the year, at the earliest, and even in 2011, with the Gross Domestic Product (GDP) remaining negative until then.

The research further shows a positive trend in Bulgaria's export and reserve of goods, however, households continue to restrict their consumption.

The recovery of the Bulgarian economy still depends on many factors such as activation of the country's key trade partners, increased desire for riskier investments by the European developing markets, and the speed of applying reforms in the country.

Data about the payment balance shows that the recovery, accompanied by increased export, has begun, according to the bank's experts.

Regarding households, in addition to low consumption, unemployment would be the top challenge for the recovery.

The UniCredit Group economists see the slump in the housing market as the main reason for the recession where prices have gone down 30%. However, in many regions, the real estate market shows trends of stabilization. In the Black Sea Region, where prices were the highest during the construction boom, the price decrease was and is still lower than other parts of the country, showing the market there will need more time to become rebalanced.

The analysis points out that the strongest sides of the Bulgarian economy are: no need of aggressive measures for fiscal consolidation compared to other developing markets, strong commitment to carry out structural reforms, still unused potential for economic growth by better management of EY funds. The week sides are: large external debt carried by private businesses, and slower dynamics of adjustment over the fixed rate of the local currency.

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Tags: UniCredit Bulbank, Unicredit, recession, GDP, consumer confidence, unemployment, economic recovery


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