불가리아 주요경제뉴스 (10 - 17 December 2010 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (10 - 17 December 2010 )

 

Sections/headline briefs:

 

 

 

MACROECONOMY:

• Bulgaria's economy set for full recovery in mid-2012 – UniCredit
• Bulgaria to Absorb 1.5 Billion Levs on EU Programmes in 2011
• Exports up by 31.6% y/y in Jan-Oct
• GDP growth to reach 2.2% in 2011 - CEE Quarterly
• Ernst & Young sees Bulgaria’s economy growing by 3.6% in 2011, 6% in 2012
• Retail sales down by 4.8% y/y in Oct

 

INVESTMENTS:

 

• FDI contracts by 66.5% in January-October
• Korean Companies Plan to Invest EUR 500 M in Bulgaria

• Bulgaria's Economy Registers Negative Investments for October

·         Bulgaria Expects EUR 2 Billion of Investments in 2011

 

COMPANIES:

·         NEC to build green power units

·         Dynamo to launch production of wind turbines, electric car engines

·         Sofia airport passenger traffic rises by 8% in Nov

·         Bulgarian Organizations Form Digital Industry Association

 

 

 

 

 

 

 

 

 

Articles:

 

MACROECONOMY:

 

Bulgaria's economy set for full recovery in mid-2012 - UniCredit

Bulgaria will likely fail to unleash its full economic potential before the middle of 2012, as individual consumption recovery will continue to be hampered by low domestic demand and high precautionary savings, according to UniCredit's latest CEE report. The economists consider that the improvement third-quarter indicators chiefly mirrors a steady rebound in Bulgaria's manufacturing competitiveness. The growth in exports, however, will not be sufficient to rescue the rest of the economy, with individual consumption turning into the weak spot of the country's recovery.
Furthermore, adjustments in the number of jobs in some domestic demand-oriented sectors is still in place, which weighs on the pace of economic revival. "The sharp contraction of individual consumption in the third quarter of 2010 highlights the household sector's need for more time to join the recovery," UniCredit Bulbank's chief economist, Kristofor Pavlov, said. Although data on domestic demand-oriented sectors is less encouraging, employment in export-led segments is improving, implying that "roughly a third of the economy is out of the red zone," according to the analysts. Furthermore, the pace of the economic recovery will also be curbed by structural reform delays, Pavlov said. "Some investors seem confident that the toughest tests for the Greek recovery still lie ahead. This affects both the inflow of foreign capital and debt servicing costs for the Bulgarian economy," he said. Meanwhile, growth prospects for the Bulgarian economy have been improving in recent months, which made UniCredit believe that the country's gross domestic product (GDP) will end in positive territory at the end of 2010. UniCredit estimated that Bulgaria will post a modest 0.1 per cent growth in GDP for the current year, which will improve to 2.8 per cent in 2011.
source: Dnevnik.bg

 

Bulgaria to Absorb 1.5 Billion Levs on EU Programmes in 2011

In 2011, a total of 1.5 billion levs will be paid on the operational programmes in Bulgaria, this sum being equal to the funds paid on the programmes for the past four years as a whole, reported Tomislav Donchev, Bulgaria's Minister for EU Funds Management. The procedures to be put forward in 2011 are for over 5.5 billion levs. It has been discussed whether banks should be allowed to function as intermediate bodies on projects with the task to implement all the technological objectives or to be given the role of certifying bodies. Thus, the authorization for projects, not exactly eligible for bank crediting would be avoided, Tomislav Donchev explained. To his words, it is very likely that the intermediate bodies for the next programming period 2014 - 2020 would be not only banks but NGOs, companies etc.

 

Exports up by 31.6% y/y in Jan-Oct

Exports increased by 31.6% y/y to BGN 24.8bn (EUR 12.7bn) in January-October, decelerating from 33.1% y/y in January-September, preliminary data of the statistics office showed. In October alone, exports grew by 20.9% y/y to BGN 2.8bn. Imports (CIF) rose by 8.9% y/y to BGN 29.9bn for the ten months and by 11.3% y/y to BGN 3.4bn in October. Imports (FOB) climbed by 8.8% to 28.1bn for the ten months and by 11.4% y/y in October. The foreign trade was in a deficit of BGN 3.2bn (FOB/FOB), down by 46.3% y/y, and of BGN 5bn (FOB/CIF) , down by 41.1% y/y, in January-October. Exports to the EU rose by 23.4% y/y to BGN 15.2bn and to third countries - by 47% to BGN 9.6bn. Imports (FOB) from the EU went up by 7% to BGN 16.6bn and from third countries - by 11.6% y/y to BGN 11.5bn. 

GDP growth to reach 2.2% in 2011 - CEE Quarterly

Bulgaria is expected to register a GDP growth of 0.1% at the end of 2010, according to the latest edition of UniCredit’s CEE Quarterly report. In 2011, GDP growth is expected to reach 2.8%. All expectations were reviewed upwards compared to the previous edition of the CEE quarterly, which forecast a 0.5% GDP drop at the end of 2010 and 2.2% GDP growth in 2011. According to the report, the competitiveness of Bulgaria’s export-oriented sectors has been restored and these sectors have started to create new jobs, which contributes to a significant improvement of the economic growth outlook. Exports are expected to increase by 12.1% y/y at the end of 2010 and by 6.2% y/y at the end of 2011. The CEE Quarterly report expects this recovery to continue and sees positive investment in 2011, however, it cautions against excessive enthusiasm as domestic-oriented sectors would continue to grow below their potential for several quarters to come. Among the other strengths of the country, CEE Quarterly lists the low public sector debt and the improved EU funds absorption. The country’s major weaknesses are the high corporate private sector debt, the significant exposure to Greek economic difficulties and the limited policy room to respond to potential new shocks.

 

Ernst & Young sees Bulgaria’s economy growing by 3.6% in 2011, 6% in 2012

Bulgaria’s economy is expected to grow by 3.6% next year and by 6% in 2012, BTA agency reported quoting representatives from the Sofia office of Ernst & Young consultancy firm. However, there is a risk that the tighter fiscal policy, aimed at cutting the budget deficit, might keep growth below these forecasts. The government targets to reduce the budget deficit to 2.5% of GDP next year, down from the expected 4.5% for 2010. The country’s GDP is seen shrinking by 1% in 2010, compared to a 5% fall in 2009. After it posted a GDP decline of 0.5% in Q1, Bulgaria managed to report two successive GDP rises of 0.5% in Q2 and 0.3% in Q3. The growth was entirely driven by strong exports with signs of investment starting to recover in response to more robust external demand, and a continuing decline in domestic demand. Ernst & Young expects Bulgaria to join the eurozone no earlier than 2014.

 

Retail sales down by 4.8% y/y in Oct

Retail sales declined by 4.8% y/y in October from the revised 4.7% y/y in September, statistics office data showed. In monthly seasonally-adjusted terms, the index continued to narrow, falling by 0.6% in October after decreasing by 0.9% m/m in September. This is a third consecutive month with a monthly drop in retail sales. The retail sales of food, beverages and tobacco inched up by 0.4% y/y, but could not make up for the 5.3% y/y drop in the sales of non-food products and the 8.6% y/y drop in automotive fuel sales. In monthly terms, the retail sales of food, beverages and tobacco inched up by 0.4% m/m. Negative dynamics was registered in the sales of non-food products by 0.2% m/n and of automotive fuel - by 1.3% m/m.

 

 

INVESTMENTS:

 

FDI contracts by 66.5% in January-October

Foreign direct investment in Bulgaria for Jan-Oct 2010 was EUR 844.9 million or 66.5% y/y lower, according to preliminary data of the central bank. FDI for the ten months of 2010 comprised 2.3% of GDP, as compared to 7.2% of GDP a year earlier. Net direct investment flows plunged in negative territory to EUR -44.7mn in October. In Jan-Oct they amounted to EUR 717.7mn, down by 73% y/y, respectively. The drop in FDI inflows was mainly driven by a reduction in the equity capital attracted which decreased by 44% y/y. The contraction in the intra-company loans of non-banking companies also had negative impact and contributed to the decrease in the FDI inflows to the country. As recalled, foreign direct investment stood at EUR EUR 901.4 million in Jan-Sep, down by 59.6% y/y.

Korean Companies Plan to Invest EUR 500 M in Bulgaria

Representatives of major companies from South Korea have informed BulgarianPrime Minister Boyko Borisov of their large-scale investment plans for the country at a meeting on Monday. The Korean Development Bank, Korea South-East Power Co., Korea Trade Insurance Corporation, and SDN Company Ltd have presented to Borisov the project for the construction of a photovoltaic park near the village of Zlataritsaclose to Veliko Tarnovo. The facility will feature a power distribution and a 4.7-km power line of its own, and the Korean companies will invest a total of EUR 150 M in it. EUR 20 M have already been invested in the solar power plant since August 2010 when the construction of the facility started. The Korean companies present at the meeting have told Borisov that they planned to invest about EUR 500 M in Bulgaria in the next few years in various projects.

South Korean Ambassador to Bulgaria, Chun Bi-ho, and Bulgaria's Deputy Economy Minister Marii Kosev also attended the meeting, during which the largest South Korean corporate investor in Bulgaria – solar power firm SDN Company Ltd– made a donation of BGN 1 M to the Bulgarian government. Gi Hyeok Choi, President and CEO of SDN Company Ltd, presented Monday a BGN 1 M check to Bulgarian Prime Minister Boyko Borisov as part of the company's corporate social responsibility program. The donation will be presented to the Bulgarian Ministry of Economy, Energy, and Tourism, whose experts will determine together with representatives of the Korean company how best to spend the money. SDN Company Ltd is a leading South Korean investor in photovoltaic installations and solar power plants, says the press service of the Bulgarian Cabinet.

 

Bulgaria's Economy Registers Negative Investments for October

Bulgarian National Bank has reported 44.7M euro negative direct investments in October, investor.bg informed. This situation might be due to losses of a company with shares of foreign capital, sale of assets of a foreign company to local firm or payment of credit from foreign company. Direct foreign investments for the period January-October 2010 total 844.9M euro compared to 2,526 billion euro in 2009. The drop is 66%. In 2010 in Bulgaria had come 1.29M euro from EU financial aid and money transfers from emigrants, compared to 787M euro in 2009. 

 

Bulgaria Expects EUR 2 Billion of Investments in 2011

Borislav Stefanov, Director of InvestBulgaria Agency.For 2010, I expected that 2 billion euro would be poured into Bulgaria’s economy from foreign investments. I expected that the investments in finances, real estates and trade will be 50-60% of the inflow in 2009, but it so happened that the investments in the banking sector are three times less in 2010 and, respectively, the drop in the financial sector grosses 1 billion euro. The analysts conceal that for the last 5 years the investments in Bulgaria have been mostly directed to finance, trade and real estates, i.e. these are mainly credits. They do not depend on any concrete policy. When the financial markets are restored and people again start buying houses and cars on credit, the investments in these spheres will go up.
The interesting thing this year is that all other investments - in industry, energy are, so to say, equal to the ones in the previous years. The investments in these sectors total 845 million euro. We register a growth of the investments in the production of foods and drinks by 56 million euro. The investments in chemical products - cement, fertilizers, glass, grow by 79 million euro while the investments in the business services are up by 91 million euro.

 

COMPANIES:

NEC to build green power units

The national power grid operator NEC announced the construction of up to 50 MW renewable energy units, mostly wind and solar parks, Dnevnik daily reported. However, NEC will continue to delay permits for other green energy producers, which have applied to link their networks to NEC, due to insufficient capacity. The company requested from the renewable energy producers to wait until NEC upgrades its infrastructure in order to handle the soaring volumes of energy supply. The company estimated that it needs about BGN 150mn per year for network modernization. 

 

Dynamo to launch production of wind turbines, electric car engines

Bulgarian engine manufacturer Dynamo Sliven will launch production of wind turbines and electric car engines as of 2011, investor.bg reported. The company has managed to restore its pre-crisis production levels in 2010, Dimitar Kolev, chairman of Dynamo’s board of directors, said as cited by investor.bg. Dynamo was founded in 1967 and produces car alternators and starters as well as electric engines. Around 90% of the company’s output is exported, with Russia, Ukraine and the USA accounting for the bulk of Dynamo's exports.

 

Sofia airport passenger traffic rises by 8% in Nov

Sofia airport serviced 229,806 passengers in November, up 8% on the year, Dnevnik daily reported. The number of passengers on international flights increased by 19,441. Earlier this week, the airport’s CEO Nikolay Kabakchiev said that the number of passengers is forecast to be over 3.32mn in full-2010, which will represent a 6% increase compared to last year. In November, Sofia airport handled 3,832 flights, up 11.2% year-on-year. Bulgarian air carriers reported a 13% increase in flights on regular routes, while foreign airlines registered a 10% growth. The airport handled a record-high of 300 cargo flights last month, or by 17% higher than the same month of 2009. 

Bulgarian Organizations Form Digital Industry Association

Several Bulgarian NGOs on promoting web technologies have come together to form what has been described as informal association of the digital industry.

The participants that signed Thursday a cooperation memorandum include theWebit Ambassadors Program for Central and Eastern Europe, a program of the organizers of the largest e-business expo in Eastern Europe – the Sofia-basedWebit; the Bulgarian Advertisers' Association, the Bulgarian National Self-Regulation Council, the Bulgarian Web Association, Interactive Association Bulgaria, and the BG Site Foundation.

The goals of the new informal Bulgarian digital industry association are to represent the Bulgarian digital industry before the relevant Bulgarian, EU, and global institutions; to draft joint positions for the development of the Bulgarian digital market; to defend the interests of the digital business and its consumers.

"This step sets a new beginning in the development of the digital industry in Bulgaria. The changes that the Internet and mobile technologies are bringing to our lives and the way to do business, marketing and advertising should be reflected in the legislation and the regulation mechanism in order to develop the industry and to defend the rights of the consumers," stated Plamen Rusev, Chair of e-Academy, a Sofia-based international education institute, which is the organizer of Webit, e-Business & e-Marketing Expo and Conference for Central and Eastern Europe. The first edition of Webit took place in Sofia in October 2009; the second edition did in October 2010.

In his words, the informal association of the Bulgarian digital industry has a lot of work to do – to come up with suggestions on the implementation of the EU directive for personal data with respect to the use of the Internet; the EU directive for behavior targeted online advertising; the coordination of the ethic self-regulation standards in the field for the benefit of the users, among others.

"All European nations are faced with these challenges today, and in this sense the united digital industry in Bulgaria is a definitive prerequisite for fruitful dialogue with the legislature and the executive as well as with the representatives of consumer organizations," said in turn Dora Vasileva, Chair of the Bulgarian Web Association.

On Wednesday night, the members of the informal digital industry associationhad their first official meeting with government representatives including the Deputy Minister of Transport and IT Parvan Rusinov, and experts from the Economy Ministry. The association presented to the government its positions on the digital business environment in the country.