불가리아 주요 경제뉴스 (22 – 29 July 2011)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (22 – 29 July 2011)

 

Sections/headline briefs:

 

 

MACROECONOMY:

Ø  Мoody’s raises sovereign rating to Baa2, stable outlook

Ø  EBRD lowers growth forecast to 2.3% in 2011

Ø  Bulgaria Mulls Exporting Wheat to Jordan

Ø  Total Business Climate Indicator Up by 0.7 Per Cent in July from June

 

 

INVESTMENTS:

Ø  Foreign Investment in Bulgaria Expected to Reach about EUR1,500 Mln

 

COMPANIES AND INDUSTRIES:

Ø  Soft Drinks Consumption, Prices Drop in First Half of 2011

Ø  Bulgaria's industrial orders grew second-fastest in EU in May

Ø  Sofia BT, Pleven BT record profits in H1 2011

Ø  Ferrous metals sales rise 33.7% y/y in H1 2011

Ø  Eko Bulgaria to build 20 more filling stations by 2015

Ø  Sectoral Market Analysis: Fuel Sales Down 8%, Locally Produced Meat Prederred, Clothing Industry Recovering, Wine Industry Shrinking

Ø  Bulgaria's Neochim returns to profit in H1 2011

 

 

 

 

 

 

 

Articles:

 

MACROECONOMY:

Moody’s raises sovereign rating to Baa2, stable outlook

International credit rating agency Moody’s upgraded the government debt ratings by one notch to Baa2 from Baa3 with stable outlook, the Agency informed on its website. The main factors behind the action were the ongoing fiscal discipline and improving institutional strength as well as the financial system's relative resilience in a volatile regional environment. Also, Moody’s upgraded the country ceiling for foreign currency deposits to Baa2/P-2 from Baa3/P-3, and aligned the country ceiling for local currency deposits at Baa2 (down from Baa1) because of the currency board arrangement. The country ceiling for foreign currency debt was raised from A1 to Aa3, equivalent to the Aa3 country ceiling for local currency debt. The Agency may further upgrade the rating if economic convergence leads to ERM II entry. A downgrade is possible in case of serious deterioration in external liquidity and/or a persistent weakening of fiscal policy that causes government debt to rise significantly. Moody’s placed the sovereign rating on watch for possible upgrade in early April. 

EBRD lowers growth forecast to 2.3% in 2011

The EBRD has revised down its growth forecast to real 2.3% this year from 3.1% in its May projection and 2.6% in its January projection, according to its latest Regional Economic Prospects report. GDP growth is to accelerate to 3.7% next year (up from 3.6% projected in May). The institution comments that the economic recovery in the country has slowed slightly in H1 as industrial production growth has decelerated since Q1. In all countries of EBRD-operation, the GDP will increase by an average of 4.8% this year (up from 4.6% and 4.2% in May and January forecasts, respectively) and 4.4% next year. The institution expects the average inflation to accelerate to 4.2% this year (down from projected 4.6% in May) from 3% in 2010. The EBRD has kept all other macroeconomic indicators forecasts unchanged from its May report. The fiscal balance is expected to narrow to 2.6% of GDP in 2011. The CA gap is to expand to 1.5% of GDP this year as compared to 0.8% of GDP last year and the net FDI flows will improve to 4% of GDP this year from 3.4% of GDP in 2010.

 
Bulgaria Mulls Exporting Wheat to Jordan

Bulgaria could export wheat to Jordan, covering all the Arab country's wheatneeds, it was announced after a meeting between Bulgarian Agriculture MinisterMiroslav Naydenov and his Jordanian counterpart Samir Habashneh. Bulgaria could provide 800 tons of wheat for direct export to Jordan, Naydenov has clarified, as cited by BGNES. The Balkan state looks for a long-term contract for at least 5 years, he added. Besides wheat, Jordan is interested in importing barley, corn and grain fodder from Bulgaria, it was also made clear. Habashneh, who is also Minister of State, pointed out that Jordan can export freshfruits and vegetables to Bulgaria during the winter season, as well as high-quality olive oil and dates. He stated that Naydenov is working industriously for his country's prosperity. Habashneh and Naydenov launched a Bulgarian-Jordanian business forum in the Bulgarian Agriculture Ministry on Tuesday.

 

Total Business Climate Indicator Up by 0.7 Per Cent in July from June

In July 2011 the total business climate indicator increased by 0.7 percentage points compared to June, the National Statistical Institute (NSI) said on Thursday. The indicator improved in industry, construction and retail trade and deteriorated in the services sector. The long-term average level of the indicator rose by 9.9 percentage points. The composite indicator Business Climate in Industry increased by 1.1 percentage points from June. The composite indicator Business Climate in Construction increased by 2.6 percentage points, mainly due to more optimistic expectations of construction entrepreneurs about the business situation over the next six months. In July the composite indicator Business Climate in Retail Trade increased by 3.6 percentage points compared to June. In July the composite indicator Business Climate in the Services Sector dropped below its June level, by 5.0 percentage points. The decrease was due to managers' more reserved expectations about the business situation of enterprises over the next six months rather than to a negative adjustment of assessments about the present business situation.

 

 

INVESTMENTS:

 

Foreign Investment in Bulgaria Expected to Reach about EUR1,500 Mln

Speaking to the media, InvestBulgaria Executive Director Borislav Stefanov said that by the end of 2011 foreign investment in Bulgaria's industry and its energy sector are expected to stay at their level of previous years, reaching 1,000 - 1,500 million euro by the end of year. on Tuesday the BIA management presented the conclusions and recommendations of World Investment Report (WIR) 2011. The report is made on an annual basis and published by the United Nations Conference on Trade and Development (UNCTAD). The latest presents a world-wide picture of investments in 2010. In January-May the amount of investment in Bulgaria was minus 25 million euro. It means that the money which companies "exported" from the country is more than the money that entered it in the form of foreign direct investment (FDI). The minus value does not mean that companies have withdrawn their productions from Bulgaria but that this year they began to pay back the loans they had been granted by the mother companies in previous years, Stefanov said. There are three or four such companies that paid back intercompany loans of over 100 million euro each. There are financial companies having to settle big loans, too. According to data contained in the report, in 2010 Bulgaria was third after the Czech Republic and Romania by amount of investment. In that year investment in Bulgaria was a little over 1,600 million euro, about 30 per cent down from 2009. Within the region, this amount is comparable with the investment made in Hungary and Greece - a little over 2,000 million US dollars (in the report the investment amounts are in US dollars). The Czech Republic leads as investment recipient with about 6,000 million US dollars; foreign investment in Romania comes up to about 3,000 million US dollars. Foreign investment in Serbia is 50 per cent of the amount invested in Bulgaria; investment in Slovakia is four or five time less. From a global point of view, there is a serious slump in foreign investment in Europe. Of the industrial countries the United States is the only country that registered a rise in investment, by 40 per cent. Of the developing market, Asia is recovering from the crisis at the fastest pace. China continues to be the largest recipient of foreign investment, about 100,000 million US dollars in FDI. Investment in India tumbled by nearly 40 per cent.

 

 

COMPANIES AND INDUSTRIES:

 

 

Soft Drinks Consumption, Prices Drop in First Half of 2011

The Bulgarian Soft Drinks Association has reported soft drink sales of 406 million litres in the second quarter of 2011, down 5 per cent on a year earlier when 427 million l were sold. First-quarter results are also similar to the year-earlier figures. First-half consumption totalled 678 million l, nearly 34 million l less than a year earlier. on the whole, soft drink prices in the first half of 2011 dropped slightly due to a fall in on-premise consumption. Retailers and consumers continued to be mostly interested in soft drinks at the lower end of the price range and in packaging for off-premise consumption. As to bottled water, first-half consumption in 2011 was down 5 per cent, 18 million l less than a year earlier. Consumption dropped for all groups of bottled water. Natural fruit juices and nectars were hit worst by the adverse economic trends. First-half sales totalled 18 million l, down 8 per cent, nearly 3 million l less than a year ago. Iced tea consumption, which saw considerable growth in the last two years, grew 2 per cent in the first half of 2011. Energy and sports drinks consumption slid 2 per cent. Analysis of first-half soft drinks consumption shows that the volatile situation due to the economic downturn caused a further contraction in consumption. Forecasts show that the drop can be 4 per cent at the year's end and per capita consumption may return to 210 litres. Still, Bulgarian consumers are among the EU's top ten. 

 

Bulgaria's industrial orders grew second-fastest in EU in May

Bulgaria's industrial orders grew by 42.9 per cent year-on-year in May 2011, which was the second largest annual increase in the European Union (EU) in the period, Eurostat data showed. In monthly terms, the country's industrial orders advanced 14.1 per cent in the period. Estonia was the sole country to perform better than Bulgaria in May, registering an annual increase in orders of 62.1 per cent. Lithuania came third with a rise of 22.6 per cent, followed by Portugal and France with a growth of 21 per cent each. The lowest annual increase in industrial orders was recorded by Denmark, of 0.8 per cent, Ireland (3.4 per cent) and Hungary (4.3 per cent). Debt-ridden Greece observed an increase of 8.4 per cent, while Germany, the main driver of Europe's economy, registered a rise of 15.7 per cent. The average increase in the eurozone was 3.6 per cent in annual terms, while industrial output in the EU countries went up 2.5 per cent.

 

Sofia BT, Pleven BT record profits in H1 2011

Bulgaria's cigarette factory Sofia BT and tobacco processing company Pleven BT, both subsidiaries of state-owned tobacco group Bulgartabac, ended the first half of 2011 with positive results, their non-consolidated reports showed. Sofia BT, however, registered a 69 per cent annual slump in net profit to 1.43 million leva in the period. Sales of cigarettes grew to 72.7 million leva in the first six months of the year from 57 million leva in 2010, but production costs rose to 64 million leva from 45 million leva. According to Sofia BT estimates, Bulgaria's grey market had already reached 40 per cent of the total cigarette sales in the country as of end-June. Sofia BT raised its cigarette exports by 16.03 per cent on an annual basis through June. Most of its production was sold in the Middle East, the Balkan states and the Commonwealth of Independent States (CIS). Pleven BT, in turn, saw its net profit soar six times to 1.46 million leva in the first half of 2011, from 212 000 leva in 2010. Revenue jumped 74 per cent, while production costs grew by 63 per cent. The company processed 5246 tons of tobacco in the period, an annual increase of 42.2 per cent.

Ferrous metals sales rise 33.7% y/y in H1 2011

The sales of ferrous metals have increased by 33.7% to 613,200 tons in H1 and by 50% to 376,400 in Q2, according to data of the line association quoted by Dnevnik Daily. Ferrous metals production has gone up by up to 30% y/y in H1 as well. The recovery started in Q3 2010 and some of the producers have reached the record-high levels of 2008, the last year before the crisis. Exports accounted for more than 78% of total sales and 75.5% of all sales abroad were to the EU member states. The association expects the positive trend to sustain this year. 

Eko Bulgaria to build 20 more filling stations by 2015

Bulgaria's fuel retailer Eko Bulgaria, part of Greek group Hellenic Petroleum, plans to add 20 petrol filling stations to its network by 2015, boosting the number to 102, the company said on July 25. The expansion is in line with the company's plans to become one of the country's top three fuel retailers in Bulgaria. Currently, Eko Bulgaria has 82 outlets throughout the country. Since its entry on to the Bulgarian market in 2002, Hellenic Petroleum Group has invested more than 260 million euro in building new filling stations and buying and upgrading existing facilities. After acquiring Ekо Petroleum in 2005, the Greek company bought sector players Tempo Petrol and Opet Aygaz three years later. By early 2009, Eko had already developed a network of 77 stations and four fuel depots across the country.

Sectoral Market Analysis: Fuel Sales Down 8%, Locally Produced Meat Prederred, Clothing Industry Recovering, Wine Industry Shrinking

A sectoral analysis of the market in Bulgaria shows that fuel supply has dropped by 8 per cent on the Bulgarian market, that Bulgarian buyers prefer locally produced meat and that the clothing industry is making a slow recovery. Looking at the situation on the market for fuels, textiles, the clothign industry, the meat processing and wine industries in the first quarter of 2011, the analysis was prepared by Capital Market AD and was made public by the Bulgarian Industrial Association Thursday. Bulgaria's trade with fossil fuels and lubricants grew by 75.8 per cent year-on-year. The domestic output of fossil fuels for ICE use totalled 812,000. Imports grew by 6.9 per cent and export by 2.7 per cent. Sales on the domestic market shrank by 7.8 per cent from this time last year. The textile industry showed signs of stabilization and recovery. Textile imports went up by 25.5 per cent and exports by 36.5 per cent. Domestic sales of woollen textiles soared by 28 per cent. The clothing industry showed a growth by 6.1 per cent year-on-year. However, there was a 6 per cent deline from the fourth quarter of 2010. Imports of ready-to-wear gained 12.4 per cent from the first quarter of 2010 and exports 18.8 per cent. Sales on the domestic market were also on the rise. The first quarter of 2011 saw an increase (1.2 per cent) in the domestic output of meat and meat products and the turnover from sale of products and services in this sector gained 12.7 per cent. Imports continue to grow (by 8.8 per cent year-on-year). The import of meat was 83 per cent of all imports. The wine industry experienced a decline in output (0.9 per cent on-year). Wines with appellation of origin went down 24.4 per cent and the others by 0.8 per cent. Wine imports are increasing at a fast pace (by 54.1 per cent year-on-year). Imports are dropping (by 4.3 per cent from the first quarter of 2010).

 

 

Bulgaria's Neochim returns to profit in H1 2011

Bulgarian fertiliser maker Neochim ended the first half of 2011 with a net profit of 19.1 million leva against a net loss of 2.56 million leva in H1 2010, the company's non-consolidated report showed. The plant's sales soared 90 per cent on an annual basis to 164 million leva in H1 2011. The figure is close to Neochim's revenue of 180.5 million leva recorded in the first half of 2008, when the crisis had not yet hit the Bulgarian economy. Neochim's first-half results show that the company has survived through the crisis, but problems related to funding farmers and fluctuating purchase prices of agricultural production are still weighing on its sales. The company now aims to work at full capacity, while its main goal is the development of new markets, in particular expansion in EU countries. Among Neochim's challenges is the increasing competition on the domestic market of rivals from Georgia, Romania and Kazakhstan. The satisfactory performance was reflected in the price of its stock, which has grown by 35 per cent to 39.89 leva a share since the beginning of 2011.

 

 

 

 

 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea