불가리아 주요 경제뉴스 (11 - 18 November 2011)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (11 - 18 November 2011)

 

Sections/headline briefs:

 

 

MACROECONOMY:

• WB forecasts 2% GDP growth in Bulgaria in 2011, 2012
• Bulgaria Registers 3.5% Inflation Y/Y in Oct 2011 
• Bulgaria's Economic Growth Stagnating in Q3 2011
• Bulgarian Economy at Standstill

 

INVESTMENTS:

·         Bulgaria's Kozloduy nuke plant to invest 120M leva to boost capacity

·         Foreign Investments Drop by 50%

• Bulgaria to seek investors in nine countries
• Bulgaria's FDI Crawls Up to EUR 535 M in Q1-Q3
• AES Solar to build 20.6 MW solar power plants near Silistra
• China Pours EUR 30 M in Agriculture in Bulgaria, EU's Poorest Region
• Turkey's Sisecam To Invest Some $400 Mln in Bulgarian Plant by End-2013 - Media

 

 

COMPANIES AND INDUSTRIES:

·         Bulgaria's Burgas, Varna Airports New Passenger Terminals To Open in 2013

• Great Wall to launch car production in Lovech in early 2012

·         Bulgaria's leasing market weakens further in Q3 2011

·         Patnostroitelna Tehnika wins two contracts for work on Trakiya Motorway

·         Bulgaria's new car sales grow 24% in October – ACEA

·         Russian Gazprom Eager to Set Foot on Bulgaria's Fuel Retail Market

 

 

Articles:

 

MACROECONOMY:

 

WB forecasts 2% GDP growth in Bulgaria in 2011, 2012

The World Bank (WB) projects that Bulgarian GDP will increase by 2% both this and next year, according to the newly published EU-10 Regular Economic Report. The institution has downgraded its forecasts from 2.5% this year and 3.4% next year published in its previous report from November 2010. At the same time, the EU-10 countries (Bulgaria, the Czech Republic, Estonia, Hungary, Latvia, Lithuania, Poland, Romania, Slovakia, and Slovenia) are expected to expand by 3% this year and 2.1% next year as compared to 3.1% this year and 3.8% next year in the previous report. The WB commented that Bulgaria has benefited from export-driven growth and weak domestic demand pressed down overall economic growth rates. However, the country faced significant reduction in export growth in the past months in line with global slowdown. WB underlines also that Bulgaria has managed to clear its macroeconomic imbalances as CA turned to a surplus of some 2% of GDP in H1 from a deficit of 23% of GDP in 2008 and the inflation rate slowed the most as compared to the other countries in the group. 

 

Bulgaria Registers 3.5% Inflation Y/Y in Oct 2011

The consumer price index (CPI) in October 2011 compared to September 2011 was 100.8%, meaning the monthly inflation was 0.8%. The data was reported Monday by the National Statistical Institute (NSI). The inflation rate since the beginning of the year (October 2011 compared to December 2010) was 2.3% and the annual inflation in October 2011 compared to October 2010 was 3.5%. The annual average inflation, measured by CPI, in the last 12 months (November 2010 - October 2011) compared to the previous 12 months (November 2009 - October 2010) was 4.5%. In October 2011 compared to the previous month the prices of goods and services in the main consumer groups have been changed as follows: food and non-alcoholic beverages - an increase of 1.5%; alcoholic beverages and tobacco - an increase of 0.1%; clothing and footwear - an increase of 4.2%; housing (rentals, maintenance and repair), water, electricity, gas and other fuels - an increase of 0.4%; furnishings, household equipment and routine maintenance of the house - a decrease of 0.2%; health - an increase of 0.2%; transport - a decrease of 0.3%; communications - the prices have remained at the level of the previous month; recreation and culture - a decrease of 0.2%; education - an increase of 1.3%; restaurants and hotels - an increase of 0.4%; miscellaneous goods and service - an increase of 0.3%. The harmonized index of consumer prices (HICP) in October 2011 compared to September 2011 was 100.3%, i.e. the monthly inflation was 0.3%. The inflation rate since the beginning of the year (October 2011 compared to December 2010) was 1.7% and the annual inflation in October 2011 compared to October 2010 was 3.0 The annual average inflation, measured by HICP, in the last 12 months (November 2010 - October 2011) compared to the previous 12 months (November 2009 - October 2010) was 3.7%. In terms of HICP in October 2011 compared to the previous month the prices of goods and services in the main consumer groups have been changed as follows: food and non-alcoholic beverages - an increase of 1.2%; alcoholic beverages and tobacco - an increase of 0.1%; clothing and footwear - an increase of 3.7%; housing (rentals, maintenance and repair), water, electricity, gas and other fuels - an increase of 0.3%; furnishings, household equipment and routine maintenance of the house - an increase of 0.1%; health - an increase of 0.2%; transport - a decrease of 0.7%; communications - the prices have remained at the level of the previous month; recreation and culture - a decrease of 0.5%; education - an increase of 1.3%; restaurants and hotels - an increase of 0.2%; miscellaneous goods and service - an increase of 0.4%. The price index of a small basket (PISB) in October 2011 compared to September 2011 was 101.0% and the overall increase since the beginning of the year (October 2011 compared to December 2010) was 102.9%. In October compared to the previous month the prices of goods and services in the small basket for the 20% households with the lowest income, have changed as follows: food products - an increase of 1.4%; non-food products - an increase of 0.5%; services - the prices have remained at the level of the previous month. he harmonized index of consumer prices (HICP) is the comparable measure ofinflation across EU Member states. It is one of the criterions of price stability and for readiness of Bulgaria to join the Euro Zone. HICP, as well as CPI, measures the total relative price change of goods and services. Both indices are calculated using the same basket of goods and services, but differ with respect to the used weights. HICP is calculated through the use of weights, which reflect the individual and the collective consumption of all households (incl. institutional and foreign households) on the economic territory of the country. The main source of information for HICP weights is the national accounts data. The price index of a small basket (PISB) is a measurement of the relativeaverage price changes of 100 socially useful and vital for the living goods and services. The weights of this index reflect he expenditures of the 20% lowest income households. The source of weights information is the Households Budget Survey in the country.

 

Bulgaria's Economic Growth Stagnating in Q3 2011

Bulgaria registered an economic growth of 1.3% in the third quarter of 2011 year-on-year, according to preliminary data of the National Statistical Institute in Sofia. At the same time, however, the Bulgarian economy is stagnating on quarterly basis as seasonally- adjusted GDP was unchanged in the third quarter. The Bulgarian economy expanded by 2% in the second quarter on an annual basis, and by 3.4% in the first quarter of 2011 year-on-year, which marked the first considerable increase in economic growth since the country plunged into a recession. In the second quarter, Bulgaria's seasonally adjusted GDP edged up by only 0.3% in the first quarter. In absolute terms, Bulgaria's GDP amounted to BGN 21.171 B in Q3 2011, NSI said. The added value of the economy in the third quarter amounted to BGN 18.148 B, of which 57.6% is formed by the services sector, 31.3% by industry, and 11.1% by agriculture. In the third quarter the gross added value of the Bulgarian economy grew by 1.0% compared with the second quarter; the consumer spending grew by 0.4%. Gross fixed capital formation decreased by 13.7%. Exports of goods and services in the third quarter increased by 1.4% compared to the previous one. During the same period, imports of goods and services decreased by 3.3%. During the third quarter of 2011 gross value added increased by 2.5% compared to same quarter of the previous year. The indicator's increase is determined mainly by the increase recorded in the industry sector (4.1%) and services (1.9%). Agriculture has a negative contribution to value added with a decline of 0.1% over the period. Bulgaria's government expects the 2011 economic growth to be 2.8%, and a growth of 2.9% in 2012. The Fall Economic Forecast of the European Commission unveiled on November 10 says the Bulgarian economy will expand 2.2 % in 2011 and 2.3 % in 2012.

 

Bulgarian Economy at Standstill

The economic growth in Bulgaria has come to a halt. The GDP made a null increase in the third trimester of the year compared to the previous three months and has actually grown by only 1.3% compared to the same period in 2010. The previous two trimesters recorded growth of respectively 1.5% and 2.2%. The nominal value of the GDP in the third trimester of 2011 is 21.17 billion levs. The growth in the industry sector and the service sector on an annual basis is respectively 4.1% and 1.9%. The agrarian sector has made a negative growth of 0.1%. The individual consumption has made an annual growth of only 1.7% and investments have shrunk by 3.1% which determines the economy's overall weak growth. 

INVESTMENTS:

 

Bulgaria's Kozloduy nuke plant to invest 120M leva to boost capacity

Bulgaria's Kozloduy nuclear power plant (NPP) plans to boost the capacity of its fifth and sixth units to 104 per cent, the facility's executive head Alexander Nikolov said. That way, the capacity of each reactor will reach 1100 MW, he said. When working at 100 per cent capacity, the units generate 1040 MW of power each and following the upgrade they will produce 60 MW more, according to Nikolov. The investment will cost below one million leva per MW, or a total 120 million leva, which is significantly less than building a new 60-MW plant. In a positive scenario, the plant will complete the capacity upgrade of unit 6 and unit 5 by the end of 2013 and 2014, respectively. Meanwhile, the plant expects to release the spent nuclear fuel from its closed third and fourth reactors and to transfer the units to Radioactive Waste State Company (RWSC) in May or June 2012, nearing their complete decommissioning.

 

Foreign Investments Drop by 50%

Foreign investments in Bulgaria amount to 535.7M euro for the first nine months of 2011, data from Bulgarian National Bank shows. During the same period in 2010 foreign investments were two times more over 1 billion euro. Netherlands with 326.1 M euro and Russia with 148.5 M euro are the biggest foreign investors in Bulgaria. Transport, Storage and Investments sector tops the ranking for net revenue with 319.1 M euro for the period January ? September 2011.

 

Bulgaria to seek investors in nine countries

Bulgaria will promote eight domestic sectors in nine different countries that are considered potential investment targets as part of a project of InvestBulgaria Agency, Capital Daily said on November 14 2011. Bulgaria will present opportunities for investments in outsourcing and information technology (IT) at a forum in London on December 1. In Belgium and France, the country's presentation will focus on food, agriculture and logistics, while in Russia and Dubai it will be centred on the food industry and tourism. Bulgaria's presentation in Germany will outline options for investments in transport, chemicals and electronics. In addition to these three sectors, the country will also promote logistics at the forums in Japan and China. In the US, Bulgaria will advertise all sectors excluding tourism. The project, worth 21 million leva, will be financed under the Competitiveness operational programme and envisions inviting only pre-selected qualified investors.

 

Bulgaria's FDI Crawls Up to EUR 535 M in Q1-Q3

Bulgaria attracted a total of EUR 535 M of foreign direct investment in the first nine months of 2011, according to preliminary data of the Bulgarian National Bank. Thus, Bulgaria's FDI in Q1-Q3 amounted to 1.4% of GDP; it declined by some 40% year-on-year, compared with the EUR 1.031 B (2.9% of GDP) attracted in January-September 2010. The figures for the first nine months demonstrate a notable increase in Bulgaria's FDIafter Bulgaria attracted a total of EUR 225.6 M of foreign direct investment in the first eight months of 2011; this comes to indicate that Bulgaria's FDI in September alone came at about EUR 310 M. According to BNB data, Bulgaria's FDI in the first half of 2011 amounted to only EUR 7.9 M. Bulgaria's attracted Equity Capital (acquisition/disposal of shares and equities in cash and contributions in kind by non-residents in/from the capital and reserves of Bulgarian enterprises and receipts/payments from/for real estate deals in the country) for January – September 2011 amounted to EUR 535.7 M. It decreased by EUR 508.1 M compared to that attracted in the same period of 2010 (EUR 1.044 B). Bulgaria's receipts from real estate investments of non-residents amounted to EUR 184 M, compared to EUR 176.1 M attracted in January – September 2010. The other capital, net (the change in the net liabilities of the direct investment enterprise to the direct investor on financial loans, suppliers' credits and debt securities) was negative, amounting to EUR 70.1 M in January – September 2011, compared to a negative other capital, net of EUR 86.6 M in January – September 2010. Based on preliminary data on profit/loss, the reinvested earnings (the share of non-residents in the undistributed earnings/ loss of the enterprise) in January – September 2011 were estimated at EUR 68.9 M, against EUR 73.6 M in the same period of 2010. By country, the largest direct investments in Bulgaria in January – September 2011 were those of the Netherlands (EUR 326.1 M) and Russia (EUR 148.5 M). The largest negative flows for the period were towards the United Kingdom (EUR 139.8 M), mainly due to net payments on intercompany credits in accordance with the loan repayment schedules of enterprises, BNB points out. By branch, the largest net inflows for January – September 2011 were in Transport, storage and communication (EUR 319.1 M). The largest net payments in the reporting period were in manufacturing (EUR 144.9 M). According to preliminary data in January – September 2011, Bulgaria's direct investment abroad amounted to EUR 80.7 M, compared to EUR 138.6 M in January-September 2010. In 2010, Bulgaria's FDI was EUR 1.64 B, and in 2009 - EUR 2.4 B, after the peak pre-crisis levels of EUR 9.05 B in 2007, and EUR 6.7 B in 2010. In an interview for Novinite.com (Sofia News Agency) earlier this week, Borislav Stefanov, CEO of the InvestBulgaria Agency explained the limitations of the methodologies used in order to calculate Bulgaria's FDI, and provided a more thorough analysis, stressing that foreign investors' interest in Bulgaria is actually growing regardless of the statistics.

 

AES Solar to build 20.6 MW solar power plants near Silistra

The US AES Solar plans to build seven photovoltaic power plants with total production capacity of 20.6 MW near the Danube town of Silistra, Kapital Daily reads. The project will be financed with EUR 48mn from Societe Generale Expressbank. The first of the power plants with capacity of 3.8 MW has already been constructed and launched at the beginning of this year. The remaining plants are still under construction, which is to be completed by May 2012. In 2009, AES (together with Geo Power) opened a EUR 270mn wind power park near Kavarna in northeast Bulgaria and earlier this year inaugurated a 670 MW coal-fired power plant in the Maritsa East mine complex in southern Bulgaria. 

 

China Pours EUR 30 M in Agriculture in Bulgaria, EU's Poorest Region

China's Tianjin State Farms Agribusiness Group Company is investing a total of EUR 10 M in the lease of agricultural land in Northwestern Bulgaria, the poorest EU region, the Bulgarian government announced. Bulgaria's Prime Minister Boyko Borisov and Agriculture Minister Miroslav Naydenov received the Deputy Agriculture Minister of China Gao Honbin andBai Zhislieiig, Chair of Tianjin State Farms Agribusiness Group Company in Sofia on Thursday. The Chinese company has rented 20 000 decares of land in Bulgaria's Northwestern (Severozapaden) Region – the poorest NUTS 2 region in the EU – to producecorn, forage, and sunflower. All of the agricultural produce will be exported to the People's Republic of China. The plots in question are located in the Boynitsa Municipality, Vidin District, which according to Eurostat data has about the lowest GDP per capita in the European Union. "Bulgaria has made an important first step in the realization of joint projects withChina. We have the potential and resources to develop eco agriculture as well," Bulgarian Prime Minister stated upon receiving the Chinese officials, stressing that Bulgaria has the lowest taxes in the EU, and a stable investment environment. China's Tianjin State Farms Agribusiness Group Company intends to invest EUR 20 M more in Bulgarian agriculture with some of the funds going into animal breeding. Thus, in the medium run, its investment in Bulgaria is expected to reach EUR 30 M. "With this project that we are starting in the Boynitsa Municipality we are demonstrating the interest of the People's Republic of China in cooperating with Bulgaria," China's Deputy Agriculture Minister Gao Honbin declared. The governments of Bulgaria and China are mulling a bilateral agreement for phytosanitary permits for agricultural exports, the government press service said.

 

Turkey's Sisecam To Invest Some $400 Mln in Bulgarian Plant by End-2013 – Media

Turkish glassmaker Sisecam plans to invest around $400 million (297 million euro) by the end of 2013 in raising the number of production lines at its Bulgarian plant, local media reported. Sisecam has started the construction of two new production lines for flat and tableware glass at its Trakiya Glass Bulgaria plant in Targovishte, in the country's northeast, news daily Trud (www.trud.bg) reported on Tuesday, adding that they should be completed by the end of 2012. In the following two years, the company plans to add production lines for laminated and energy efficient glass and to expand its installations for car windshields, raising their total number to nine. Sisecam currently employees directly over 1,000 people in Bulgaria with a further 500 jobs created in supporting activities.

 

 

COMPANIES AND INDUSTRIES:

 

Bulgaria's Burgas, Varna Airports New Passenger Terminals To Open in 2013

Bulgaria's Fraport Twin Star Airport Management said on Tuesday the new passenger terminals at the two airports it operates on the country's Black Sea coast are planned to start welcoming their first guests in time for the 2013 summer season. The turn-key contract for the construction of the new terminals at the Burgas and Varna airports was signed on Tuesday with Bulgarian-Turkish consortium TIE-Ictas, Fraport Twin Star Airport Management said in a statement. The two airports are the main gateways to the local coastal resorts for millions of foreign tourists. The construction works, which will create over 500 jobs, are scheduled to start in December. The new terminal in Burgas will have an area of around 20,000 square meters (sq m), 31 check-in desks and the capacity to process 2.7 million passengers annually. The terminal in Varna will have an area of 18,000 sq m, 25 check-in desks and the capacity to handle 1.8 million passengers annually. Over the next two years, Fraport Twin Star Airport Management plans to invest around 150 million levs ($104.8 million/76.7 million euro) in the development of the two airports. TIE-Ictas comprises Turkey's Ictas and Bulgaria's Technoimportexport AD. In 2006, Fraport Twin Star Airport Management, a 60/40 joint venture between Germany's Fraport and Bulgarian company BM Star, won a 35-year concession to manage the airports in Burgas and Varna.

 

Great Wall to launch car production in Lovech in early 2012

Chinese car maker Great Wall is to inaugurate production of cars at its plant in the central Bulgarian city of Lovech early next year, investor.bg reports. The company has already opened representative offices all over the country. Great Wall plans to raise the offices number to 15 by the end of the year and 22 next year. The annual production capacity of the plant, which will employ some 2,000 employees, will be 50,000 cars. The investment in the car-assembling facility is to reach EUR 80mn. The project is implemented in cooperation with local Litex Motors. 

 

Bulgaria's leasing market weakens further in Q3 2011

Bulgaria's leasing market contracted for an 11th quarter in a row, Bulgarian National Bank (BNB) data showed on November 15 2011. In July-September 2011, leasing firms' receivables dropped by three per cent compared to the prior quarter and by 13 per cent year-on-year to 3.72 billion leva. In the previous quarter, receivables slid 6.1 per cent in quarterly terms and 21.14 per cent against the year-earlier period. Non-performing leasing in the three-month period edged up 0.9 per cent compared to the previous quarter, with its share reaching 22.8 per cent of overall leasing contracts. The increasing share of non-performing leasing is a result not only of the growth in volume, but also reflects the contraction in the overall size of receivables and the slow improvement of new leasing contracts. Like other financing companies, leasing firms have been also affected by the stagnating market environment since businesses, which represent the bulk of the clients in the sector, have ceased investments or restricted purchases of long-term assets such as machinery, industrial equipment, motor vehicles and lorries.

 

Patnostroitelna Tehnika wins two contracts for work on Trakiya Motorway

Bulgarian construction firm Patnostroitelna Tehnika, controlled by businessman Vasil Bozhkov, has won two contracts for construction work along the Trakiya Motorway worth a combined 25 million leva. The first order, valued at 10.8 million, has been assigned by state-run company Napoitelni Sistemi, managed by the Agriculture Ministry. The contract envisages conducting additional design and construction works along lot IV of the motorway, linking Yambol and Karnobat, to prevent flooding of surrounding agricultural land and adjacent facilities. The second contract, worth 14.6 million leva, has been assigned by the Road Infrastructure Agency jointly with Spanish company Axiona. The project stipulates stabilising soil in different parts of the section. The 49km Yambol-Karnobat section of the motorway should be completed by the end of 2012.

 

Bulgaria's new car sales grow 24% in October - ACEA

Bulgaria's car market grew by 26 per cent in October, European Automobile Manufacturer's Association (ACEA) data showed on November 16 2011, although the data is misleading. Although Bulgaria's industry association said it would cease publishing data on vehicle sales, ACEA seems to have calculated car deals in the country, as evidenced from its report. According to ACEA's estimates, sales of passenger cars in Bulgaria stood at 1729, rising by annual 24.5 per cent. In January-October, sales of new cars rose by 26.7 per cent to 16 083. However, the data is far from the reality, since cars bought by dealers from abroad, mainly from EU countries, are also counted as vehicles sold in the country, as dealers come to Bulgaria to purchase new vehicles because prices are much lower than those in other EU members.

 

Russian Gazprom Eager to Set Foot on Bulgaria's Fuel Retail Market

Russian giant Gazprom, the sole supplier of natural gas to Bulgaria, is preparing to set foot on the local fuel retail market. The company has already launched its expansion in Bulgaria through its Serbian unit, Naftna Industrija Srbije, which has started buying filling stations in Bulgaria, according to reports of dnevnik.bg. NIS Petrol EOOD, which has already sealed contracts for the purchasing small filling stations currently operated by Geriya EOOD, Ir Max EOOD, B Plus OOD, Gand Oil OOD, Tim Oil OOD, Arena – I.T. EOOD and by two natural persons – Krasimir Georgiev and Teodora Yordanova, was registered in Bulgaria in end-August. According to Andrey Delchev, Chairman of the Bulgarian Petroleum and Gas Association (BPGA), the Russian energy giant is eyeing a market share of around 8%. If this happens, NIS Petrol will become the fourth fuel retailer in the country and will outpace Eko-Elda Bulgaria, a subsidiary of Greek Hellenic Petroleum Group, which has a market share of around 7%. Analysts say that the company cannot achieve its goal unless it buys several filling station chains, even if they are of the smaller type. Gazprom's unit is said to have started talks with Petrol, which is in a tough financial condition and urgently needs money to meet bond payments, but no deal has yet been reached at this stage. Bulgaria has a total of 3122 filling stations, 1300 of which belong to companies which are members of the BPGA, according to statistics of the Commission on Protection of Competition.

 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea