BULGARIAN ECONOMY Monthly Report 1/2016


According to the flash estimate, GDP expanded by 3.1% yoy s.a. in Q4 2015. Growth was largely driven by domestic demand with final consump-tion up by 2.5% and investments in fixed capital up by 1.4%. Export growth decelerated to 0.7%.

Short-term business statistics gathered mo-mentum in December, as all headline indices reported positive growth rates on a year earlier. The business climate and the consumer confi-dence indicators improved in the beginning of 2016 as well.

The unemployment rate (LFS) decreased to 7.9% in Q4 2015, which is a record low since end-2009. The total number of employees in-creased by 0.9% yoy supported by the positive developments in the private sector, while the public sector had a negative contribution to the labour demand. The average wage in the coun-try stepped up by a nominal 8.0% yoy, again due to the higher increase of private sector wages. The HICP deflated real wage growth came at 9.1% yoy, boosting further the purchasing pow-er of incomes.

The HICP index registered a minor 0.1% mom decrease in January 2016, with energy goods accounting the most for the monthly decline of the headline rate. The negative annual inflation rate decelerated further to -0.3% yoy, reflecting the depleting base effect from the decline in crude oil prices.
The current account came in negative at EUR 289.7 mln in November, as the trade deficit ex-panded and the balance on secondary income turned negative. Cumulatively, the current ac-count balance narrowed to 1.8% of projected GDP for the eleven months of the year, while the financial account stood negative at 3.1% of GDP.

Consolidated budget deficit amounted to BGN 2.5 bn (2.9% of projected GDP) on a cash basis in 2015. The budget balance improved by 0.8 pps compared to the end-2014. Fiscal reserve stood at BGN 7.9 bn as at 31 December 2015, while the government debt amounted to EUR 11.6 bn (26.4% of projected GDP).

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