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Bulgaria Country Report - September, 2016

  • October 2016
  • -
  • Emerging Markets Direct Media Holdings
  • -
  • 39 pages

This report covers the key economic, financial and political releases for Bulgaria for the period September 19 - October 20.



The Bulgarian Academy of Sciences (BAS) has raised its GDP growth forecast for this year to 2.9% from the 1.9% expected in the spring. Earlier in October, in its autumn macroeconomic forecast the Bulgarian ministry of finance revised upwards its projection for 2016 real GDP growth to 2.6%, from 2.1% expected in the spring macroeconomic forecast. In the October edition of its World Economic Outlook (WEO), the International Monetary Fund (IMF) raised its projection for Bulgaria's 2016 GDP growth to 3% from 2.3% forecast in April.



The statistics office now reports Bulgaria's real GDP growth at 3.6% in 2015, up from 3% reported previously. GDP data for the first and second quarters of 2016 have been revised upwards as well, now indicating growth of 3.6% y/y and 3.5% y/y, respectively.



Bulgaria's overall business climate indicator was flat m/m for the second consecutive month in September. The industrial production increased by 2.6% y/y in August, accelerating from a 2.3% y/y rise in July. The construction output fell 10.2% y/y in August, after decreasing by 11.7% y/y in July. Annual growth of retail sales (at constant prices) accelerated to 5.4% in August from 2.3% July.





Key points:

oThe CPI declined by 0.6% y/y in September, after dropping 0.3% y/y in August

oBulgaria reported a consolidated budget surplus of BGN3.39bn (EUR1.73bn) in January-September 2016, equal to around 3.8% of projected GDP, preliminary data from the finance ministry showed

oThe country reported a current account surplus of EUR1.91bn in the first eight months of 2016, up from a surplus of EUR805.5mn in the same period of 2015

Table Of Contents

Bulgaria Country Report - September, 2016
1.EXECUTIVE SUMMARY5

2.POLITICS6

Bulgaria's opposition DPS officially backs presidential bid of former PM Oresharski6

Bulgarian parliament committee approves last-minute electoral code changes6

Presidential candidates of Bulgaria's GERB, BSP likely to go to runoff, survey shows7

Bulgarian government to resign if GERB's presidential candidate does not win first round7

Bulgaria's ruling GERB party leads in opinion poll8

Bulgaria's ruling GERB party leads in opinion poll9

3.MACROECONOMIC OVERVIEW10

Bulgaria's Baa2 rating underpinned by strong fiscal position, resilient economy, Moody's says10

Bulgaria's business confidence unchanged m/m in September11

4.REAL SECTOR11

4.1 GDP, forecasts11

Bulgarian Academy of Sciences raises 2016 GDP growth forecast to 2.9%11

Finance ministry raises Bulgaria's 2016 GDP growth forecast to 2.6%12

IMF raises Bulgaria's 2016 GDP growth forecast to 3%12

4.2 Inflation13

4.2.1 Consumer price index13

Bulgaria's CPI deflation deepens to 0.6% y/y in September13

4.2.2 Producer price index14

Bulgaria's annual PPI deflation eases to 2.7% in August14

4.3 Industry and Trade15

4.3.1 Industrial production15

Bulgaria's industrial production growth speeds up to 2.6% y/y in August15

4.3.2 Construction volume16

Bulgaria's construction output decline softens to 10.2% y/y in August16

4.4 Investment16

Gross fixed capital formation edges down y/y in Q216

4.5 Labour and retail17

4.5.1 Unemployment and wages17

Bulgaria's unemployment rate drops to 7.8% in September17

4.5.2 Retail17

Bulgaria's retail sales growth accelerates to 5.4% y/y in August17

5.EXTERNAL SECTOR AND TRADE18

5.1 Balance of payments and current account18

Bulgaria's current account surplus jumps 2.4 times y/y in January-August18

5.2 Trade19

Bulgaria's foreign trade deficit narrows 32% y/y in January-August19

5.3 Foreign direct investment (FDI)20

FDI in Bulgaria sinks 33.3% y/y through August20

5.4 External debt21

Bulgaria's gross external debt rises 0.5% y/y at end-July21

5.5 Foreign reserves22

Bulgaria's foreign reserves rise 0.8% in September22

6.PUBLIC SECTOR22

6.1 Budget22

Bulgaria reports budget surplus of 3.8% of GDP in January-September22

Bulgaria's fiscal reserve edges down in August23

Bulgaria at risk of losing EU funds if it fails to meet certain conditions24

Bulgaria's parliament approves loan to NEK to settle EUR629mn nuclear project debt in second reading25

6.2 Government debt25

Bulgaria's central government debt drops 0.1% m/m at end-August25

7.FOREIGN EXCHANGE26

Bulgarian lev depreciates 1.7% against US dollar over past month26

8.FINANCIAL SECTOR AND CAPITAL MARKETS27

8.1 Banking system27

Bulgarian banking sector profit rises 46% y/y in January-August27

Bulgaria's M3 growth speeds up, non-government loans edge up y/y in August27

Bulgaria's deposit, lending interest rates mixed m/m in August28

Fitch rates Bulgaria's UniCredit Bulbank BBB with negative outlook29

EBRD lends EUR50mn to Raiffeisen Leasing Bulgaria to boost access to finance for SMEs30

8.2 Interest rates and bond market30

Bulgaria's long-term convergence interest rate drops to all-time low in September30

8.3 Stock Market31

Bulgarian bourse index SOFIX rises 6.2% in past month31

8.4 Credit ratings31

No rating actions on Bulgaria over past month31

9.INDUSTRY AND SECTORS NEWS32

Bulgaria's accommodation revenue rises 15.2% y/y in August32

Foreign tourists in Bulgaria up 18.4% y/y in August32

Bulgarian prosecutors indict three over EUR77mn damage from nuclear equipment deal33

Bulgaria's gross electricity production drops 12.9% y/y in January-July33

Bulgaria's antitrust regulator accuses 6 fuel retailers of forming cartel34

Bulgarian regulator raises natural gas price by 2% in Q435

Four new companies interested in using Greece-Bulgaria natural gas interconnection35

New car sales in Bulgaria rise 14.7% y/y in September36

Bulgaria receives 8 bids for 16.3 km section of Hemus motorway36

10.MAJOR CORPORATE NEWS37

Bulgaria's Prista Oil Group buys back minority shares of EBRD, ADM Capital37

Bulgarian coal miners end underground protest over delayed wages37

Portugal's BA Vidro acquires Bulgarian glass container maker Drujba Glassworks38

China's BAIC Automotive considers production of electrical buses in Bulgaria38

Hamberger receives class A investment certificate for EUR15mn expansion in Bulgaria38





Table 1 CPI, % y/y14

Table 2 Domestic market PPI, % y/y15

Table 3 Current account, EUR mn19

Table 4 Foreign trade, FOB/FOB, BGN mn20

Table 5 Gross external debt, EUR mn21

Table 6 Consolidated budget, BGN mn23

Table 7 Fiscal reserve, BGN mn24

Table 8 Central government debt, EUR mn26

Table 9 Money supply, domestic credit, loans28

Table 10 Electricity data, GWh34



Figure 1 Bulgaria CPI, % y/y13

Figure 2 Domestic market PPI, % y/y15

Figure 3 Industrial output16

Figure 4 Construction output16

Figure 5 Retail sales18

Figure 6 FDI in Bulgaria, EUR mn20

Figure 7 Gross external debt, EUR mn21

Figure 8 Foreign reserves22

Figure 9 Fiscal reserve, BGN mn24

Figure 10 Daily exchange rate, BGN per 1$26

Figure 11 Average interest rates on new euro loans29

Figure 12 Long-term convergence interest rate31

Figure 13 SOFIX31

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