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Bulgaria Country Report - July , 2016

  • August 2016
  • -
  • Emerging Markets Direct Media Holdings
  • -
  • 30 pages

This report covers the key macroeconomic, financial and political releases for Bulgaria for the period since July 17, 2016.



Bulgaria's real GDP growth accelerated to 3% y/y in the second quarter of 2016 from 2.9% y/y in the previous three months, a seasonally-adjusted statistics office flash estimate showed on August 12.



The asset quality review (AQR) and stress test of the banks in Bulgaria have shown that the country's banking system is stable and no public support will be needed, central bank governor Dimitar Radev said in a statement on August 11. The commercial banks First Investment Bank (Fibank) and Investbank are expected to build up additional capital buffers, of BGN205.7mn (EUR105.2mn) and BGN33.3mn respectively, according to detailed results published on August 13.



Bulgaria's business confidence deteriorated in July. The industrial production increased by 3.9% y/y in June, reversing a 3.4% y/y decline in May. Bulgaria's construction output fell 13% y/y in June, after decreasing by 8.2% y/y the month before. Retail sales (at constant prices) increased by 5.4% y/y in June, accelerating from a 4% y/y rise in May.





Key points:

oThe CPI edged down 0.2% y/y in July, after dropping by 1.3% y/y in June

oBulgaria reported a consolidated budget surplus of BGN3.27bn in January-July, equal to around 3.7% of projected GDP, preliminary data from the finance ministry showed

oThe country reported a current account surplus of EUR693.8mn in the first half of 2016, reversing a deficit of EUR91.9mn in H1 2015

Table Of Contents

Bulgaria Country Report - July , 2016
EXECUTIVE SUMMARY4

MACROECONOMIC OVERVIEW5

Bulgaria's consumer confidence worsens in July5

Bulgaria's average per capita income rises 3% y/y in Q25

Bulgaria's long-term convergence interest rate drops to 2.39% in July6

REAL SECTOR6

1.GDP6

Bulgaria's GDP growth slightly speeds to 3% y/y in Q2, flash estimate shows6

2. Inflation7

Bulgaria's CPI deflation eases to 0.2% y/y in July7

Bulgaria's annual PPI deflation eases to 4.2% in June8

3. Industry and Trade9

Bulgaria's business confidence worsens in July9

Bulgaria's industrial production rises 3.9% y/y in June9

Bulgaria's construction output decline deepens to 13% y/y in June10

Bulgarian building permits, new construction data largely negative in Q211

Bulgaria's retail sales growth accelerates to 5.4% y/y in June11

4. Labour Market12

Bulgaria's unemployment rate drops to 8.2% in July, labour agency data show12

Bulgaria's unemployment rate drops to 8% in Q2, labour force survey shows12

Bulgarian nominal gross wage growth slows to 7.8% y/y in June13

5. Tourism14

Bulgaria's accommodation revenue rises 28.6% y/y in June14

Foreign tourists in Bulgaria up 24.6% y/y in June14

FISCAL SECTOR15

Bulgaria reports budget surplus of 3.7% of GDP in January-July15

Bulgaria's fiscal reserve rises 5.1% in June15

Bulgaria's government debt to GDP ratio rises 3.6pp q/q in Q1, highest gain in EU16

Bulgaria's central government debt edges down 0.2% m/m at end-June16

Bulgaria's fiscal council sees need for improving forecasts by finance ministry17

Bulgarian PM supports reviving Belene nuclear power project with private investors17

FINANCIAL INTERMEDIATION18

Bulgarian banking sector profit rises 54% y/y in H118

Two Bulgarian banks told to build up additional capital buffers19

Bulgarian banking system is stable, stress test shows19

Latvian 4finance completes acquisition of Bulgarian TBI Bank20

Bulgaria's M3 growth speeds up, contraction of non-government loans eases in June21

Bulgaria's deposit, lending interest rates mixed m/m in June22

Bulgarian parliament elects deputy finance minister as new head of financial regulator22

EIOPA to prepare methodology for stress tests of Bulgarian insurers23

EXTERNAL SECTOR24

Bulgaria reports current account surplus of 1.5% of GDP in H124

FDI in Bulgaria drops 18.7% y/y in H125

Bulgaria's foreign trade deficit narrows 55% y/y in H125

Bulgaria's gross external debt drops 1.3% y/y at end-May26

Bulgaria's foreign reserves rise 2.9% in July27

POLITICS28

Bulgarian Socialists pick former air force commander as presidential candidate28

Frontex strengthens its activities in Bulgaria29

Bulgarian parliament schedules presidential elections for November 629



Table 1 GDP, % y/y real (flash estimate)7

Table 2 CPI, % y/y8

Table 3 Domestic market PPI, % y/y9

Table 4 Fiscal reserve, BGN mn16

Table 5 Central government debt, EUR mn17

Table 6 Money supply, domestic credit, loans22

Table 7 Current account, EUR mn24

Table 8 Foreign trade, FOB/FOB, BGN mn26

Table 9 Gross external debt, EUR mn27



Figure 1 Consumer confidence indicator5

Figure 2 Long-term convergence interest rate6

Figure 3 Bulgaria CPI, % y/y8

Figure 4 Domestic market PPI, % y/y9

Figure 5 Industrial output10

Figure 6 Construction output11

Figure 7 Retail sales12

Figure 8 Unemployment rate13

Figure 9 Fiscal reserve, BGN mn16

Figure 10 Average interest rates on new euro loans22

Figure 11 FDI in Bulgaria, EUR mn25

Figure 12 Gross external debt, EUR mn26

Figure 13 Foreign reserves27

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