불가리아 주요 경제뉴스 (17 - 27 December 2010 )

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (17 - 27 December 2010 )

 

Sections/headline briefs:

 

 

 

MACROECONOMY:

·         Moody's confirms Bulgaria's credit rating at Baa3

·         Fretful future - Forecast for Bulgaria

 

 

 

INVESTMENTS:

 

·         Bulgarian Atlantic Club Spurs Specific Business Projects with Korea

·         German Company Invests EUR 75 M in Bulgarian Wind Park

 

 

 

COMPANIES:

• French EDF EN opens EUR 4.16mn hydro-power plant in Bulgaria

·         Energy watchdog proposes 5.21% reduction of natural gas prices

·         Italian-Bulgarian consortium offers lowest price for railroad reconstruction

·         About 20 firms buy tender papers for Maritsa motorway lot 1 construction

·         EC approves application form for highway construction

·         Food retailer Piccadilly to invest EUR 20mn in 30 stores in 2011

 

 

 

 

 

Articles:

 

MACROECONOMY:

Moody's confirms Bulgaria's credit rating at Baa3

International rating agency Moody’s has confirmed Bulgaria’s Baa3 credit rating with a positive outlook, the finance ministry said in a statement on its website. According to Moody’s analysis, Bulgaria’s main advantages are its EU membership, its sensible fiscal policy, the low state debt and the considerable fiscal reserve. A future upgrade of the country’s credit rating would depend on the country’s fiscal consolidation, the transparency of budget mechanisms and the sustained economic growth. As recalled, the outlook on Bulgaria’s credit rating was upgraded from stable to positive as a result of the country’s resilience to the effects of the global economic slowdown. According to Moody’s, the country’s economy should soon return to growth, aided by the EU.

 

Fretful future - Forecast for Bulgaria

Though slow and uneven, Bulgaria’s economic recovery remained on track in the third quarter of the year, UniCredit said in its quarterly report on Central and Eastern European economies. "In our view, the outlook for growth improved on two fronts: firstly, the export-led portion of the economy fully regained its competitiveness and is again creating new jobs; secondly, we expect the recovery to broaden also in terms of growth drivers: investment stabilised in 2010 and is likely to turn positive next year," UniCredit Bulbank chief economist Kristofor Pavlov said in the report.

Economic growth sped up slightly to 0.7 per cent during the quarter, compared to 0.5 per cent in April-June, and annual gross domestic product figures returned to positive territory, at 0.5 per cent at the end of September, after five straight quarters of negative readings. Exports growth accelerated further, to 8.9 per cent on the quarter and 18.5 per cent on the year.

"Although still 15 per cent below its pre-crisis level, industrial output in September was well above its February 2010 nadir (-26 per cent), driven by a solid positive reversal over the past two quarters. More importantly, after losing 105 625 jobs over eight straight quarters, manufacturing created 4040 jobs (net) in the third quarter of 2010, suggesting that the negative trend has ended, with sector managers back in the hiring mode," the report said. But it was too early to cheer, as domestic demand growth was less encouraging. Household consumption continued its downward trend, shrinking by 2.6 per cent compared to the previous quarter and 5.9 per cent compared to the same period of 2009. "Retail credit remains weak and precautionary savings continue to rise, underscoring the household sector’s lack of strength. Additionally, sentiment indicators in trade and construction, two key domestic demand-oriented sectors, remain depressed despite recent gains, suggesting that rebalancing in these sectors is likely to need more time to fully materialise," UniCredit said. "Overall, we believe strong export growth cannot by itself rescue the rest of the economy and individual consumption increasingly becomes the Achilles heel of Bulgarian recovery."

Uncertainty on the labour market would continue to weigh on the prospects of economic recovery, while sizeable free production capacity would temper investment growth. "Perhaps most importantly, some investors seem confident that the toughest tests for the Greek recovery still lie ahead, which also negatively affects both the inflow of foreign capital and debt servicing costs for the Bulgarian economy," the report said. But UniCredit saw enough improvement to raise its economic growth forecast in 2010 to 0.1 per cent, compared to -0.5 per cent in earlier reports, and to 2.8 per cent in 2011, compared to an earlier figure of 2.2 per cent. Bulgaria would reach its full growth potential of four per cent in mid-2012, UniCredit said.

 

INVESTMENTS:

Bulgarian Atlantic Club Spurs Specific Business Projects with Korea

The delegation of the Bulgarian Atlantic Club, which was on a week-long official visit in South Korea, has come home with several specific business projects underscoring the special interest of Korean companies in Bulgaria. The visit of the delegation of the Bulgarian Atlantic Council to South Korea is the first of its kind in the 20-year history of the diplomatic relations between the Republic of Bulgaria and the Republic of Korea. The delegation consisting of the President of the Atlantic Club in Bulgaria,Solomon Passy, and businessman Maxim Behar, CEO of M3 Communications Group, Inc., the largest Bulgarian PR company, who is an Atlantic Club Board member, visited South Korea at the invitation of the Korean government and the Korean Ministry of Foreign Affairs and Trade. In addition to its meetings with high-level political figures such as South Korea's Minister of Unification, Hyun In-taek, and the US Ambassador to South Korea, Kathleen Stephens, Passy and Behar have met with senior representatives of over 20 Korean companies during their formal visit to the Korean Peninsula, which had a clear mission to promote investments and trade between Korea and Bulgaria. During their meeting with the top management of Hanjin Shipping, a premier global logistics company running terminals in the world's largest ports such as Busan, Long Beach, Tokyo, Kaohsiung, Shanghai, Qingdao, and Port Kelang, the Bulgarian representatives were assured that the major Bulgarian ports – Varna and Burgas on the Black Sea and Ruse on the Danube River – are potential investment contractors of the Hanjin Group. The Hanjin executives have made it clear that the initiative for joint projects is now in the hands of the Bulgarian authorities and business. The Bulgarian Atlantic Club delegation members have invited representatives ofCyberLogitec, a Korean IT giant, to pay a visit to Bulgaria to study the investment opportunities it has to offer. The exploratory mission by CyberLogitec harbors huge potential for Bulgarian-Korean business and economic cooperation as CyberLogitec is currently researching opportunities for settiung up a large information center in Southern Europe. If Bulgaria is selected by the CyberLogitec management for this investment, it stands to benefit not just from the creation of hundreds of hi-tech jobs, but also by becoming a primary world technology hub for the Korean company. Passy and Behar also met with Hi Ynog-kim, President of the South Korean manufacturer of agricultural equipment TYM, discussing opportunities for the assembly of Korean tractors in Bulgaria as well as for large-scale production of spare parts in Bulgarian factories such as "Madara" near the northeastern city of Shumen. The TYM President has accepted the invitation of the Bulgarian delegates to visit and study opportunities that Bulgaria has to offer in this respect. During their visits to Busan, Korea's largest industrial center, and the Jeju Island, known as an emblem of Korean-Chinese-Japanese cooperation, Solomon Passy andMaxim Behar met with businesspeople and representatives of the local administrations, and made specific arrangements for visits by Korean business executives and state officials to Bulgaria. The Bulgarian Atlantic Club leaders also paid a visit to the Jeju Peace Instituteand presented their ideas for EU's role in the unification of South and North Koreaunder the leadership of the institute, which is one of the most influential global cooperation organizations in Northeast Asia. The Jeju Peace Institute has welcomed the reaction of the Bulgarian Foreign Minister denouncing the actions of the North Korean regime during the recent crises, which heated up the tensions on the Korean Peninsula to levels unseen since the armistice in the Korean War (1953).

German Company Invests EUR 75 M in Bulgarian Wind Park

Bulgarian company IWC Bulgaria 4 owned by German Innovative Wind Concepts is planning a new wind park in the northeastern part of the country near the city of Shumen. The park located by the Krasen Dol village will include 21 wind generators, at 2-3 MW each. The yearly turnout of energy is expected to be over 100,000 MWh. The wind energy facility, which is expected to start working in 2013, will cost some BGN 150 M. The Ministry of Economy and Energy has issued a "Class-A" grading of theinvestment. This is IWC's second "Class-A" investment, the first being again awind park - the 140 MW Lozenetz facility in Dobrich region. Innovative Wind Concepts, which owns IWC Bulgaria 4, is a joint venture of WKN Windkraft Nord AG and Siemens Project Ventures GmbH.

 

COMPANIES:

French EDF EN opens EUR 4.16mn hydro-power plant in Bulgaria

Power group Electricite de France Energies Nouvelles (EDF EN) has opened a EUR 4.16mn hydro-power plant in Dzherman, soutwestern Bulgaria, Dnevnik daily reported. The plant has a capacity of 3MW and will produce 10,500 MWh a year. It is owned by Dzhermaneya, a 51%-subsidiary of EDFEN’s unit Centrale Hydroelectrique de Bulgarie. Dzherman is part of the hydro-power cascade Iskar, which includes the Pasarel and the Kokalyane plants, with a combined capacity of 53 MW. Part of the new facility will also provide the residents of the Sapareva Banya with drinking water. The Dzherman plant is the sixth hydro-power plant in which EDF EN has a share. The French company plans also to invest EUR 200mn in two new solar parks in the country. 

 

 

Energy watchdog proposes 5.21% reduction of natural gas prices

The country’s energy regulator has proposed a 5.21% average reduction in natural gas prices to BGN 509 (EUR 258) per 1,000 cubic metres, Dnevnik business daily reported citing two reports of the regulator. As a result of the proposed reduction in gas prices, central heating prices could drop by up to 5.74%. According to the energy watchdog’s calculations, central heating prices will drop the most in Pleven: by 5.74% to BGN 64 per MWh. Prices in the capital Sofia will drop by a mere 0.46%. The downward revision of central heating prices will not, however, offset the effects of the July price revision, when heating prices rose by an average 15%. The proposed amendments to natural gas and central heating prices are to be voted by the energy regulator in the last week of 2010.

 

Italian-Bulgarian consortium offers lowest price for railroad reconstruction

The consortium between Italy’s Generali Costruzioni Ferroviarie (GCF) and Bulgarian Trace and SK-13 has offered the lowest price in the tender for the reconstruction of the 290-km railroad stretch between Plovdiv and Burgas, the Dnevnik business daily reported. The consortium has offered to reconstruct all three sections of the railroad at a combined price of BGN 380mn (EUR 194mn). A total of 12 companies took part in the tender organized by national company Railway Infrastructure. The tender commission is to check the offers of all bidders and announce the winner by January 15, 2011. once the reconstruction of the railroad stretch is completed, trains will be able to travel at an average speed of 130-160 km/h compared to the current 80 km/h.

 

About 20 firms buy tender papers for Maritsa motorway lot 1 construction

About 20 local and foreign companies have purchased tender documents for the tender for the construction of lot 1 of the Maritsa motorway, BTA reported, quoting data from the roads agency. The procedure for lot 2 has been announced, too. According to previous media reports, the requirements for participants in the new tenders for the construction of the Maritsa motorway were raised after the previous contractor, Moststroy, declared insolvency. The Maritsa highway will link the Trakia motorway with the border checkpoint with Turkey, Kapitan Andreevo. The two lots have a combined length of 67km, stretching from Orizovo to Harmanli, southeastern Bulgaria, and estimated to cost EUR 209mn. The first lot is a 31.4km section between Orizovo and Dimitrovgrad, estimated at EUR 104mn. The second lot, worth EUR 105mn, will be 35km long, linking Dimitrovgrad and Harmanli. The construction works are scheduled to begin in July 2011 and finish in two years. 

 

EC approves application form for highway construction

The European Commission has approved Bulgaria’s application form for the construction of the Trakia highway, the government said in a note on its website citing prime minister Boiko Borisov. Bulgaria will have to secure 20% of the funds necessary for the construction of the highway and the EU will provide the rest of the financing. According to Borisov, this means that Bulgaria will receive a grant of BGN 400mn (EUR 204mn). The Trakia highway connects the capital Sofia with the city of Burgas on Bulgaria’s Black Sea coast and is part of the pan-European transport corridor 8.

 

Food retailer Piccadilly to invest EUR 20mn in 30 stores in 2011

Food retailer Piccadilly plans to invest EUR 20mn in the opening of 30 supermarkets and smaller shops in the country next year, investor.bg reported. The company has recently opened two supermarkets in Sofia and Russe, increasing the number of newly opened stores to seven since the beginning of 2010. It plans to open five more Piccadilly stores by the end of this year. Piccadilly is fully-owned by Serbian retail group Delta Maxi, which opened its first Tempo hypermarket in Bulgaria earlier in December. Investments in Tempo network will reach EUR 100mn by 2013. The Serbian company bought Piccadilly in 2007.