불가리아 주요 경제뉴스 (13 - 20 May 2011)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (13 - 20 May 2011)

 

Sections/headline briefs:

 

MACROECONOMY:

GDP grows 2.5% y/y in Q1 2011 – flash estimate

Bulgarian Energy Watchdog to Raise Prices of Electricity from Renewables

IMF Sees Bulgarian Economic Growth at 3%, Inflation -5.3% End-2011

World Bank to grant Bulgaria 310M euro by 2013

 

 

INVESTMENTS:

Tianjin State Farms to invest above EUR 51mn in agribusiness

Coca-Cola Invests 2.0 Million Euro in Mineral Water Drill in Bulgaria

Irish Island Renewable Energy Said to Eye Bulgaria Wind Park

 

COMPANIES AND INDUSTRIES:

Chimimport Invest asks antitrust approval to buy five car dealers

Bulgaria opens tenders to select brokers for CEZ, EVN units sale

INTERVIEW - EKO Bulgaria To Invest 15-18 Mln Euro in Network Expansion, Eyes 13% Market Share

Bulgarian new car sales grow fourth-fastest in EU

Bulgarian assembled Great Wall cars to roll off the production line this year - report

Lenovo enters Bulgaria's Top 5 largest PC vendors

 

 

 

 

 

 

Articles:

 

MACROECONOMY:

GDP grows 2.5% y/y in Q1 2011 – flash estimate

GDP (in seasonally and working-day adjusted terms) expanded by 2.5% y/y in Q1 decelerating from revised 2.9% y/y in Q4 last year, according to the flash estimate of the national statistical institute. In quarterly terms the indicator also showed a deceleration as its value added 0.4% as compared to 0.5% q/q in Q4, 0.7% q/q in Q3 and 0.8% in Q2 last year. on the supply side, the agriculture was the only sector with negative contribution and 1.6% y/y decrease of it value added. The services value added showed an increase for a second consecutive quarter after the revision and its growth rate accelerated to 1.1% y/y in Q1 from 0.5% y/y in Q4. The industry went up by 1.6% y/y slowing from 2.5% y/y in Q4, still driven by external demand mainly. The adjustments (up by 5.5%) also had positive impact on the GDP increase to reflect improved indirect taxes compliance. on the demand side, exports growth accelerated to 22.2% y/y in Q1 from 15.1% y/y in Q4 while imports expansion narrowed to 4.9% y/y from 10.6% y/y a quarter earlier. Final consumption decrease started accelerating again to 2.1% y/y in Q1 from 1.1% y/y in Q4 as a result of wages growth deceleration, the still high unemployment rate, the weak credit activity of the banks and the fiscal consolidation. The investments remained on negatively territory falling by 2.7% y/y as compared to 3.8% y/y in Q4. Gross fixed capital formation seems to be the major reason for the negative result with faster contraction than the overall indicator. The government expects GDP growth of 3.6% this year, which in our view seems plausible outcome.

 

Bulgarian Energy Watchdog to Raise Prices of Electricity from Renewables

Prices of electricity from wind, hydropower and biomass will be increased from July 1, Bulgaria's State Commission for Energy and Water Regulation (DKEVR), said in a statement Friday. The intentions for the price changes of electricity from renewable energy sources follow closely the adoption of the Renewable Energy Act, that has been labeled as restrictive to investments in the field. Biomass electricity prices will grow by 16.41% to BGN 195.03 per MW/h for power plants with a capacity of up to 5 MW/h running on agricultural waste. At present, there are no such plants in Bulgaria, but the country plans to build capacities worth up to BGN 1 B. The cost of electricity generated by low-head and medium-head hydropower plants with a capacity of 200 KW/h - 10 000 MW/h will increase by over 4.50%. The sharpest fluctuation will be in prices of electricity from photovoltaics with a capacity of up to 30 KW/p (kilowatts-peaks). Electricity generated by solar power will drop by 17.53-25.39% to BGN 576.50 per MW/h.

 

IMF Sees Bulgarian Economic Growth at 3%, Inflation -5.3% End-2011

The International Monetary Fund expects Bulgaria's economy to grow 3% at the end of this year as a global recovery boosts exports demand in the EU.The IMF forecast for the Bulgarian economy in  2011 is below the 3.6% growthprojected by the Bulgarian government in its 2011 budget. The Washington-based global lender forecasts end-year's inflation at 5.3%, according to its latest report. Bas Bakker, leader of the team, commented that the pace of recovery in the countries from SouthEastern Europe is slowing down as the financial crisis hit the region later. IMF experts have recommended further steps to reduce the deficit and create budget buffers. Europe-wide estimates are for growth of gross domestic product from 1.8 percent this year and 2.1 percent in 2012. Average annual inflation is seen at 2.7% in 2011 and 1.9% in 2012 across Europe. According Bas Bakker overall outlook for Europe and developing countries are optimistic, but still there many problems that should be solved. Lessons learned from the crisis are that high growth and surpluses should not lead to larger expenditures, but rather to new buffers, IMF report says. Furthermore, it points out that the stability of the banking systems is of great importance, because if they are shaken, that destabilize the entire country. A mission of the International Monetary Fund is on a visit to Bulgaria's capital Sofia during the period May 10-20 to hold regular bilateral discussions on economic policies with the Bulgarian authorities. Details from the report will be disseminated at the end of the mission.

 

World Bank to grant Bulgaria 310M euro by 2013

The World Bank said on May 18 2011 that it had endorsed a new partnership strategy for Bulgaria up to 2013, which stipulates the granting of four loans worth a combined 310 million euro. The World Bank group, presented by the bank itself and its affiliated institutions such as the International Finance Corporation (IFC), will provide advisory and analytical services and will also grant loans for activities that do not comply with the requirements of the European Union for financing or lending by European institutions. "Our partnership model will provide global and regional knowledge and good practice in a tailored manner. We will also learn from Bulgaria for the benefit of other countries," Peter Harrold, World Bank Country Director for Central Europe and the Baltic Countries, said. The bank said it would support sectors identified in the country's National Reform Programme as priority fields, including road and water infrastructure, improving business regulatory environment, energy efficiency, education and social inclusion of vulnerable groups. It will also continue to support activities in the private sector through its private sector arm IFC. During the first year, the World Bank will extend financial support for the overhaul of the country's railway sector by granting three loans, each worth 80 million euro. The bank will also provide a 70 million euro loan as part of a project aimed at rehabilitating the country's railway infrastructure. The finance will go to infrastructure maintenance equipment purchases by the National Railway Infrastructure Company (NRIC) to improve the quality and efficiency of railway infrastructure services in Bulgaria.

 

 

INVESTMENTS:

 

Tianjin State Farms to invest above EUR 51mn in agribusiness

Chinese Tianjin State Farms Agribusiness Group Company intends to cultivate total areas of up to 100,000 decares in the regions of Vratsa, Vidin and Montana in the northwest part of the country, the agriculture ministry informed on its website. The company mulls investment of above BGN 100mn (EUR 51mn). Tianjin State Farms may buy or rent another 40,000 decares in the regions of Elhovo and Yambol in southeast Bulgaria. The company intends to grow corn, alfalfa and other fodder and to export almost all the production to China. 

 

Coca-Cola Invests 2.0 Million Euro in Mineral Water Drill in Bulgaria

Coca-Cola will invest 2.0 million euro ($2.8 million/million euro) in a new mineral water drill in Bulgaria which will replace an existing facility, it said. "The investment is worth more than 2.0 million euro and after the drill is ready it will be donated to the Bulgarian state and will not remain the property of the concessionaire (Coca-Cola through Bankya Mineral Water) after the consession is over," the company said in a statement. Coca-Cola's operations in Bulgaria are managed by Coca-Cola Hellenic Bottling Company's (HBC). Coca-Cola HBC completed the acquisition of mineral water company Bankya in 2005. In Bulgaria it runs three factories - in Kostinbrod, Targovishte and Bankya - and has over 1,300 employees.

 

Irish Island Renewable Energy Said to Eye Bulgaria Wind Park

Irish company Island Renewable Energy may build a wind park in the Northern Bulgarian Suhindol municipality,Nikolay Nikolov, its executive director for Southeast Europe, has announced. The project, which may be launched after, wind measurements and a feasibility study, involves a 90-megawatt wind farm valued at EUR 130 M. "If we decide to go ahead with the project, construction may start in some three years," Nikolov said, as cited by Bloomberg, adding that the conclusive decision also depends on whether the government will change its Renewable Energy Act. According to a much discussed new Bulgarian Renewable Energy Act,arms and solar parks to set their price for feeding power to the grid only after construction is completed, which may cause problems in the planning stages. An array of private investors and business associations have already expressed their disappointment with the provisions of the new Renewable Energy Act saying it is aimed at closing the market for many new investments.

 

 

COMPANIES AND INDUSTRIES:

 

Chimimport Invest asks antitrust approval to buy five car dealers

Local investment firm Chimimport Invest, part of the country’s largest holding company Chimimport, has asked the state antitrust commission to approve the acquisition of five car dealers, the regulator informs on its website. The companies are ViA Intercar (selling BMW), ViA Intercar 2007 (Toyota), Varna Cars (new and used BMW), Express Car (new and used Mazda cars), and Italia Auto (new and used Fiat). The commission expects the concentration to affect the new cars market, the reserve parts sales, and related service activities. All interested parties should send opinions in a week (by May 25, 2011). The financial aspects of the deals have not been unveiled so far.

 

Bulgaria opens tenders to select brokers for CEZ, EVN units sale

Bulgaria's Privatisation Agency said on May 17 2011 it was launching tenders to select investment brokers for the sale of the Government's stakes in the units of power suppliers EVN Bulgaria and CEZ Bulgaria. The state plans to offload its 33 per cent stakes in CEZ Razpredelenie, CEZ Electro, EVN Bulgaria Elektrorazpredelenie and EVN Bulgaria Elektrosnabdyavane. After the sale, the companies will become public and their shares will be traded on the Bulgarian Stock Exchange (BSE). Potential candidates are required to have intermediated at least 40 000 transactions between 2006 and 2010 and to have generated a minimum turnover of 500 million leva during that period. The successful participants will also need to have been profitable in at least three of the past five years. The agency will allow only brokers with a full license from the Financial Supervision Commission to participate in the procedure, which means that candidates should have a share capital of at least 1.5 million leva. The Privatisation Agency announced the same requirements for investment intermediaries when opening a tender to select a broker for the sale of E.ON BulgariaNetworks and E.ON Bulgaria Sales, both units of power distributor E.ON. So far, 14 brokerages have expressed interest in the transaction.

 

INTERVIEW - EKO Bulgaria To Invest 15-18 Mln Euro in Network Expansion, Eyes 13% Market Share

Greek-owned motor fuel retailer EKO Bulgaria plans to invest 15-18 million euro ($21.2-$25.4 million) in expanding its network to 100 petrol stations from current 81 by 2015, its chief executive officer said. We will focus our investment in the next three - four years with priority in petrol stations on highways across Bulgaria. We are very strong already in big cities, that's why we will be targeting highways," Yannis Polykandriotis told SeeNews in an interview held in Sofia earlier this week. EKO Bulgaria, which is part of Greek group Hellenic Petroleum, also plans to increase its domestic market share to 13% by 2015. Our market share is slightly above 10% at present, which ranks us fifth in the country. Our goal in the short to medium term is to increase our market share by three percentage points by adding more petrol stations in our network. But in the long term we want to rank among the top three fuel retailers in Bulgaria." EKO Bulgaria's main competitors in the country of 7.35 million people are Bulgaria's Petrol and the local units of Russia's Lukoil, Austria's OMV and UK-registered Royal Dutch Shell. EKO Bulgaria has invested some 260 million levs ($187.7 million/132.9 million euro) since it was set up in 2003. It is currently buiding its third oil depot in the country, located in Sofia region. The oil depot is worth 10 million euro and will be completed in the last quarter of next year," Polykandriotis said. He added that Hellenic Petroleum plans to expand not only in Bulgaria but also in Serbia, as both countries are of strategic interest to the fuel group. We see both Bulgaria and Serbia as developing markets, they are key for us because of proximity and some other factors, so we will expand in both." In Southeast Europe, Hellenic Petroleum is also active in Montenegro, Albania and Macedonia. The company also operates in Cyprus and Georgia. Hellenic Petroleum ended last year with a turnover of 8.5 billion euro and an adjusted net income of 205 million euro.

 

Bulgarian new car sales grow fourth-fastest in EU

Bulgaria registered the fourth-largest increase in new car sales in the European Union (EU) in the first four months of 2011 and in April alone, according to the latest data by the European Automobile Manufacturers' Association (EAMA). Sales of new cars in the four-month period went up by 26.2% to 5,750, of which 1,637 were bought in April, up 35.8%. Lithuania, Latvia and Estonia were the best performers in terms of car sales among EU states. Eurozone countries registered an overall 4.1% decline in car sales in April to 1.09 million vehicles. A total 4.674 million cars were sold in the first four months of the year, down 2%. All major European markets witnessed a decline in demand for new cars, except Germany, which recorded a 2.6% increase in April. Spain saw the steepest slump in new car sales in the fourth month of 2011, of 23.3%, followed by France and the UK with 11.1% and 7.4%, respectively.

 

Bulgarian assembled Great Wall cars to roll off the production line this year - report

The first Great Wall vehicles assembled in Bulgaria are expected to roll off the production line in the second half of 2011, media reports said. The statement was made by the advertising manager of Litex Motors Kiril Georgiev. It states that by the end of May, assembly production lines will be installed near the Lovech village of Bahovitsa, and several months later the vehicles will be ready, although no exact date was specified as of yet. Chinese car manufacturer Great Wall will produce off-road vehicles in Lovech along with the Bulgarian company Litex Motors in 2011 after an agreement between the two companies worth 80 million euro was signed on November 15 2009, under which the Chinese car maker will pay $4 million for its stake in the joint venture that will make sport utility vehicles that would be sold at a price of less than $15 000. According to Dnevnik daily, three models of Great Wall will be assembled in Bahovitsa – Volex, a sedan model, Hover which is an SUV and Steed, a pickup truck. With time, the production line will expand and more models will be added, the report said. Media reports have said that the Bulgarian plant will have an annual production capacity of about 50 000 units. Litex Motors expect that once the vehicles start rolling out of the factory, they will be able to "expand" on the European market with high quality and affordable vehicles. "The cars produced in Bahovitsa are aimed at the European market and will adhere to all European standards," Georgiev was quoted as saying by Dnevnik. As China’s first private car enterprise listed on the Hong Kong Stock Exchange, the company has more than 30 subsidiaries and more than 22 000 people on its payroll. Great Wall Motor now manufactures sedans and sports utility vehicles and pickups, with an annual capacity of 400 000 complete vehicles. The company has counted on exporting production into Eastern Europe since 2006, and the Litex Motors deal signed in November 2009 can be seen as a cornerstone in future expansion into southern Europe.

Lenovo enters Bulgaria's Top 5 largest PC vendors

Chinese computer maker Lenovo emerged as the fifth-largest PC vendor in Bulgaria at the end of March 2011, Radoslav Vodenicharov, the company's regional manager for Bulgaria, told Dnevnik on May 18 2011. The company's market position has expanded almost threefold since end-2009, while its share in total sales ranges between six per cent and eight per cent, depending on the sector, he said. Lenovo's growth in the country is mainly due to the company's entry into the consumer market, according to Vodenicharov. "We have a strong position in the business with large corporate clients, where our market share has even reached double-digit rates," he said. According to data by market researcher IDC, about 61 per cent of the computers sold in Bulgaria, or more than 338 000 units, will be bought by end-users by 2014, which has made Lenovo consider the consumer segment one of its key priorities, Vodenicharov said. Lenovo launched the sale of its consumer-oriented laptop computer IdeaPad in Bulgaria in late 2009, when it had a market share of less than three per cent. "We still have a lot of work to do with the brand's establishment and its better positioning and eventually - better sales," according to Vodenicharov. In addition, Lenovo will present new series of all-in-one PCs and will expand its IdeaPad portfolio in a move to reinforce its position in the consumer market.

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea