This report covers the main macroeconomic releases of November 2013 for Bulgaria as well as financial and political trends in the country during this period.
The Bulgarian economy expanded 0.7% year on year in the third quarter of 2013, the statistics office said on December 4. This marks a slight downward revision of the preliminary estimate of 0.8%. In quarterly terms, the seasonally adjusted GDP expanded by 0.5% in Q3, also a slightly weaker rate than the flash estimate of 0.6%. The European Commission cut its projections for Bulgaria's real GDP growth to 0.5% in 2013 and 1.5% in 2014. Michele Shannon, the IMF's mission chief for Bulgaria, said in an interview for Capital Daily that preserving macroeconomic stability is a key prerequisite for higher levels of growth in Bulgaria.
The Bulgarian aggregate price level recorded a third consecutive annual decline as the consumer price index went down by 1.4% year on year in October after falling by 1.6% in September and 0.7% in August. The unemployment rate increased 0.5pps year on year to 12% in the third quarter of 2013 on higher number of people entering the labor market in search of a job.
• The overall business climate indicator increased 1.7 points month on month in November 2013 on the improved outlook in industry and services after falling 2.1 points in the previous month.
• The calendar-adjusted industrial production index registered its first annual increase since March, rising by 0.5% year on year in September.
• The approval rating of Bulgaria's government declined to 26% in November from 30% the month before.
• The IMF has said that Bulgaria’s budget deficit target of 1.8% of GDP in 2014 is justifiable. but there are revenue-side risks associated with lower-than-expected domestic demand, unrealized gains from planned administrative reforms, and subdued inflation.
Table of Contents
1. Macroeconomic Overview
1.1 Bulgaria's macroeconomic stability is key to higher output growth - IMF
2. Real Sector
2.1.1 Bulgaria's Q3 GDP growth revised down to 0.7% y/y
2.1.2 EC cuts Bulgaria's real GDP growth forecast to 0.5% in 2013, 1.5% in 2014
2.1.3 EBRD cuts Bulgaria's GDP growth forecast by 0.6pps to 0.4% in 2013 on weak domestic demand
2.2.1 Consumer prices down 1.4% y/y in October 2013
2.2.2 Domestic market PPI falls 3.9% y/y in October 2013
2.3 Industry and Trade
2.3.1 Business climate index up 1.7 points m/m in November 2013
2.3.2 Industrial production turns to 0.5% y/y growth in September 2013
2.3.3 Retail sales accelerate further to 6.2% y/y in September 2013
2.4 Labor Market
2.4.1 Unemployment rate up 0.5pps y/y to 12% in Q3 2013 - labor force survey
2.4.2 October unemployment rate up 0.4pps m/m to 11.2%
2.4.3 Eurostat puts Bulgaria's unemployment rate at 13.2% in October, up by 0.1pps m/m
2.5.1 Foreign tourist arrivals up 3.8% y/y to 8.3mn in Jan-Oct 2013
3. Fiscal Sector
3.1 Consolidated govt budget posts EUR 226.5mn deficit in Jan-Oct 2013
3.2 Parliament approves 2014 budget framework, deficit gap seen at EUR 683mn
3.3 IMF says Bulgaria’s budget deficit target of 1.8% of GDP in 2014 is justifiable
3.4 Bulgaria to raise EUR 1bn from foreign debt markets in 2014, PM Oresharski says
4. Financial Intermediation
4.1 Banking sector’s net profit down 8.8% y/y to EUR 261.5mn in Jan-Oct 2013
4.2 Banking sector assets up 6.3% y/y to EUR 43.3bn at end-October 2013
4.3 Bank deposits up 5.9% y/y to EUR 33.3bn at end-October 2013
5. External Sector
5.1 Current account turns to EUR 1.4bn surplus in Jan-Sep 2013
5.2 Foreign direct investment into Bulgaria halves y/y to EUR 854.4mn in Jan-Sep 2013
5.3 Trade gap down 38.4% y/y to EUR 1.62bn in Jan-Sep 2013
5.4 Gross external debt falls 0.9% y/y to EUR 37.2bn at end-September 2013
5.5 Foreign reserves down 1.1% m/m to EUR 14.3bn at end-Nov 2013
Government's approval rating falls 4 points m/m to 26% in November - Gallup poll
Release Date: Mon, 09 Dec 2013