Raiffeisenbank: Bulgarian Economy Sees Tangible Recovery

Bulgaria's economic recovery has become more tangible despite the still underperforming crediting and consumption, according to a macroeconomic analysis of Raiffeisenbank Bulgaria.

The Raiffeisenbank analysts have pointed to several developments in the second quarter that confirm the positive trend:

In the second quarter, the economic decline slowed down to 1.4% year-on-year; the added value of the economy rose for the first time since 2008. Bulgaria's exports is on the increase, and the trade deficit reached a record low in July 2010.

The strong performance of the tourism the same month led to a high positive balance of the current account. Bulgaria's fiscal reserve improved, and the absorption of EU funds led to a monthly budget surplus.

Bulgaria's net foreign debt declined by almost EUR 1 B since the beginning of 2010 as a result of the accumulated financial resources in the country. In July 2010, the Bulgarian banks returned EUR 307.8 M of long-term loans.

Bulgaria's unemployment dropped down to 9.2% in July, primarily as a result of seasonal employment.

The Raiffeisenbank analysis points out that in the second quarter all sectors of the Bulgarian economy registered improvement compared with the first quarter: the added value in agriculture registered a real growth of 3.8%, up from 0.9%; the industry saw a real growth of 2.9% as a result of international and domestic recovery; the decline of the construction sector is slowing down. As a whole, in the second quarter of 2010, the added value of the Bulgarian economy registered a year-on-year growth (0.5%) for the first time since 2008.

At the same time, however, Bulgaria's domestic consumption remains at low levels because of the continuing insecurity and incentives for household savings, the Raiffeisenbank analysts point out. The inflation is on the rise based on expectations for the fall months.

Individual consumption is down by 4% in 2010 Q2, year-on-year, as households continued to concentrate their financial resources on savings.

Despite what is described as good liquidity and readiness on part of the banks to issue loans, credit activity remains relatively low.

According to Kaloyan Ganev, the Chief Economist of Raiffeisenbank, the regaining of trust of economic actors has been expected to take time. Yet, the developments of the second half of 2010 are supposed to outweigh the still negative trends in the first half, and consumption is expected to registered growth.

The better than expected performance on part of the EU and the euro zone will contribute to the rise of Bulgarian exports. Crediting activity is forecast to remain relatively low in the months to come, and a more tangible recovery is expected to occur only in 2011.

We need your support so Novinite.com can keep delivering news and information about Bulgaria! Thank you!