Bulgaria Country Report - December, 2013

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Bulgaria Country Report - December, 2013

This report covers the main Bulgarian macroeconomic releases of December 2013 as well as financial and political trends in the country during this period.

S&P Ratings Services has affirmed Bulgaria's long- and short-term foreign and local currency sovereign credit ratings at BBB/A-2 but revised its outlook from stable to negative. The economy is projected to expand by 0.6% in 2013 but growth will accelerate to 1.7% in 2014, the World Bank said in the December issue of its EU11 Regular Economic Report.

Some 51% of Bulgarian companies, up from 2012’s 25%, expect the economic crisis to worsen in 2014, according to a survey by the Bulgarian Industrial Association (BIA) carried out in the period from December 1 to December 10 among 462 local firms.

Key Points:

• The calendar-adjusted industrial production index increased 4.1% year on year in October on the back of the rebounding manufacturing sector. The calendar-adjusted retail sales growth (excluding autos) strengthened to 6.9% year on year in October from 6.2% year on year in September.

• Bulgaria's overall business climate indicator fell 3.4 points month on month in December 2013 on the worsened outlook in industry, construction and retail trade.

• The unemployment rate inched up 0.3pps month on month to 11.5% in November as a result of the decrease in seasonal hiring. The consumer price index registered a fourth consecutive month of deflation after prices fell by 1.5% in November.

• Bulgaria's consolidated budget deficit widened to BGN 572mn (EUR 292.5mn) in January–November 2013 from BGN 105.3mn a year ago and equalled to 0.7% of the full-year GDP projection.

• Over 40% of the prospective voters call for the resignation of the socialist-led government of PM Plamen Oresharski.

Table of Contents

Executive Summary
1. Macroeconomic Overview
1.0.1 Bulgaria's 2012 GDP per capita at 47% of EU average - Eurostat
1.0.2 S&P affirms Bulgaria's sovereign credit rating, downgrades outlook to negative

2. Real Sector
2.1.1 GDP
2.1.2 World Bank cuts Bulgaria's 2014 GDP growth forecast to 1.7%
2.1.3 Bulgaria's GDP to grow 2.9% in 2014 - Oxford Economics
2.1.4 Half of Bulgarian firms expect the economy to worsen in 2014 - poll

2.2 Inflation
2.2.1 Consumer prices down 1.5% y/y in November 2013
2.2.2 Domestic market PPI falls 4% y/y in November 2013

2.3 Industry and Trade
2.3.1 Business climate index down 3.4 points m/m in December 2013
2.3.2 Manufacturing helps Bulgarian industrial output rise 4.1% y/y in October
2.3.3 Retail sales rise 6.9% y/y in October 2013
2.3.4 Construction output shrinks 7.8% y/y in October 2013

2.4 Labour Market
2.4.1 Unemployment rate up 0.3pps m/m to 11.5% in November 2013
2.4.2 Unemployment rate up 0.1pps to 13.2% in October - Eurostat

2.5 Tourism
2.5.1 Foreign tourist arrivals rise 3.7% y/y to 8.7mn in Jan-Nov 2013

3. Fiscal Sector
3.2 Consolidated budget deficit widens to EUR 292.5mn in Jan-Nov 2013
3.3 Bulgaria's fiscal reserve up 1.8% m/m to EUR 2.55bn at end-November 2013

4. External Sector
4.1 Current account swings to EUR 1.1bn surplus in Jan-Oct
4.2 Foreign direct investment in Bulgaria drops 43% y/y to EUR 1bn in Jan-Oct 2013
4.3 Trade gap shrinks 39.3% y/y to EUR 1.8bn in Jan-Oct 2013 Gross external debt falls 1.3% y/y to EUR 36.6bn at end-October 2013

5. Politics
5.1 Over 40% of Bulgarians call for resignation of government – poll

Number of pages: 19
Release Date: Tue, 07 Jan 2014