Direct Investments in Bulgaria Fall from 2.9 Billion Euros in 2020 to 1.4 Billion in 2022Finance | December 19, 2022, Monday // 09:16| views
The Ministry of Economy and Industry does not have complete information on the compensations paid due to high electricity prices, as the measure is administered by the Ministry of Energy.
This is how the Minister of Economy Nikola Stoyanov commented on the effect on the economy of more than BGN 10 billion in compensation for electricity.
"Undoubtedly, the measure is important for preserving the competitiveness of Bulgarian enterprises and limiting the consequences of the sharp increase in electricity prices," the Minister of Economy points out.
He notes that compared to 2020, when the economy was only affected by the health crisis, in the current year, the military conflict in Ukraine also had a significant impact on it, which also had negative effects globally.
Here are the main indicators of our economy in recent years with a focus on its development after the start of the conflict in Ukraine and, accordingly, the introduction of compensation for businesses.
Since 2010, GDP has reported sustained growth, with the exception of 2013, when the economy reported a slight decline, and 2020, when the decline due to the health crisis was more serious, or 4.0%.
"In general, during the period, the annual growth of the Bulgarian economy is in the range of 1.0%-4.0%, which is an indicator of the sustainability and predictability of the economic environment in the country," the economic department notes.
In 2021, the economy began to overcome the consequences of the corona crisis and GDP recovered by 7.6% on an annual basis.
In the first and second quarters of 2022, the economy continued its recovery and GDP recorded an increase of 5.2% and 4.6% respectively on an annual basis. Economic growth in the third quarter of 2022 was 3%, compared to the average GDP growth for the EU27 for the same period it was 2.4%,
According to the autumn macroeconomic forecast 2022 of the Ministry of Finance, GDP growth in 2022 will be 2.9%, and in 2023, 1.6%. The forecast of the European Commission from the fall of 2022 is even more optimistic and predicts growth of the Bulgarian economy in 2022 by 3.1%.
Regarding the socio-economic situation, before the onset of the health crisis, a positive trend was observed in the labor market. The crisis caused by the coronavirus had an impact, expressed in the rise of unemployment in the country in 2020 to 6.7%, but after the removal of restrictive measures, this indicator began to fall.
At the end of 2021, unemployment fell to 4.3%, according to the latest data in October 2022.
According to the autumn forecast of the MoF, unemployment in the country will reach 4.6% this year, and 4.5% next year. Taking into account what has been reported so far, there is a high probability that this forecast will turn out to be pessimistic and that unemployment will be at lower levels.
The intensity of inflationary processes in recent years was influenced by economic processes at the national and international level,
The crisis as a result of COVID-19 led to lower inflation, which in 2020 was only 1.7%, but as a result of the economic recovery that began in 2021, inflation reached 3.3%.
The military conflict in Ukraine influenced an increase in inflation globally, and Bulgaria was no exception in this regard. From the beginning of 2022, a tendency of gradual strengthening of inflationary processes is reported. From 9.2% in January 2022, the consumer price index rose 18.7% year-on-year in September. This was also one of the main challenges during the caretaker government, as after all the actions taken, in two consecutive months we observe a decrease in this indicator, the Ministry of Economy states.
In October, this indicator reported a decrease of 17.6%, and in the annual inflation for November 2022 compared to November 2021, it was 16.9%.
According to the latest macroeconomic forecast of the Ministry of Finance, this year the average annual inflation will reach 12.7%, but will decrease to 6.4% next year.
In 2020, as a result of the COVIO-19 crisis, the index of industrial production decreased by 6.2% on an annual basis. In 2021, industrial production recovered by 9.2% compared to the previous year.
Since the beginning of 2022, growth in the index of industrial production has been reported, with the average monthly growth of the index for the period January-October 2022 being 15.8% on an annual basis. It is characteristic that since July the growth of the index of industrial production is decreasing. From 18% growth of the index on an annual basis in July 2022, in October this indicator grew by only 5.7%. This process is not unexpected, due to the natural saturation of markets.
Despite disrupted supply chains, in October 2022 the index of industrial production reached 125.9% on a 2015 basis.
Since the beginning of 2022, the growth of the index in the manufacturing industry has been stable, and for the period January-October, the average monthly growth of the index was 14.7% on an annual basis. Maximum monthly growth was recorded in May 2022, when the index in the manufacturing industry grew by 21.5% on an annual basis, and its growth in October 2022 was 14.2%.
Direct foreign investments
In 2020, foreign direct investments in Bulgaria marked growth when they reached 2,975.6 million euros or 4.8% of GDP. In 2021, foreign direct investments worth 1,205.4 million euros entered the country, which is 1.7% of the country's GDP.
Despite the current international crisis from the beginning of 2022, for the period January-September 2022, direct investments in the country are worth 1,468.7 million euros or 1.9% of GDP.
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