불가리아 주요 경제뉴스 (2 - 9 December 2011)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (2 - 9 December 2011)

 

Sections/headline briefs:

 

 

MACROECONOMY:

• GDP in Bulgaria and EU Up by 0.3% in Third Quarter
• Bulgaria’s GDP Up by 1.6% Q3 2011 Y/Y
• Irish, Bulgarian Housing Markets World's Most Struggling
• Bulgarian Economy Goes to Standstill
• Raiffeisenbank predicts a 1.2% economical growth for Bulgaria in 2012
• Bulgaria’s industrial production speeds growth to 2.5% y/y in Oct 2011.
• Bulgaria’s construction output drops 10.2% y/y in Oct 2011
• Bulgarian government decides to exit Burgas-Alexandroupolis oil pipeline projec

 

INVESTMENTS:

·         Dundee: Bulgaria's Gold Mine Project Has 3.3 Year Payback

·         AES Geo Energy Plans 2nd Wind Park in Northeast Bulgaria

 

COMPANIES AND INDUSTRIES:

·         E.ON Left Bulgaria Due to Hostile Climate - Analysts

·         Bulgarian Firms Upbeat on Exports but Write Off EU

·         Bulgarian companies expect growth in 2012 export revenue - poll

·         LG Electronics expects 7%-10% rise in 2012 sales in Bulgaria.

·         Sales of drugmaker Sopharma drop by 23% y/y in November 2011

·         Dobrich municipality prepares EUR 57.8mn water cycle project

·         Bulgaria opens tender for EUR 37.8mn section of Sofia ring road

Articles:

 

MACROECONOMY:

 

GDP in Bulgaria and EU Up by 0.3% in Third Quarter

Brussels, December 6 (BTA) - GDP increased by 0.3 per cent in Bulgaria and in the entire EU during the third quarter of 2011 compared with the previous quarter, according to second estimates released by the Statistical Office of the European Commission (Eurostat). In the second quarter of 2011, growth rates were 0.3 per cent and 0.2 per cent respectively. Compared with the third quarter of 2010, seasonally adjusted GDP in the third quarter of 2011 rose by 1.6 per cent in Bulgaria and 1.4 per cent in the entire EU (after 1.7 per cent in the EU a year earlier). By comparison, in the United States GDP increased by 0.5 per cent during the third quarter of 2011, after +0.3 per cent in the second quarter of 2011. In Japan GDP rose by 1.5 per cent in the third quarter of 2011, after -0.3 per cent in the previous quarter. 

 

Bulgaria’s GDP Up by 1.6% Q3 2011 Y/Y

Bulgaria's Gross Domestic Product at current prices reached a little over BGN 21 M in the third quarter of 2011, according to the country's National Statistical Institute. According to the institute's seasonally adjusted data, the GDP growth rate in the third quarter of 2011 was 0.3% compared with the second quarter of 2011 and 1.6% compared with the same quarter of the previous year. In the third quarter of 2011, Bulgaria's GDP per capita amounted to BGN 2 832.8. At an average quarterly exchange rate of BGN 1.3833 per dollar, the GDP amounted to USD 15 .192 M or USD 2 047.8 per person. In Euro terms, the GDP amounted to EUR 10. 745 M or 1 448.4 euro per person. Bulgaria's gross value added (GVA) at current prices in the third quarter of 2011 amounted to BGN 17.939 M. As compared with the third quarter of 2010,  the industrial sector increased its share in the gross value added in the economy by 1 percentage point to 30.7% in the third quarter of 2011. The share of services was 58.7 %, down by 1.9 percentage points as compared with the respective period of the previous year. In the third quarter of 2011, individual consumption constituted 60.9% of the GDPin Bulgaria's economy. Investments (gross fixed capital formation) accounted for 17.8% of the GDP. The external balance (exports-imports) was positive amounting to BGN 2 329 M and accounted for 11.1% of the GDP.

 

Irish, Bulgarian Housing Markets World's Most Struggling

Ireland and Bulgaria are the countries, whose housing markets saw the sharpest fall in prices during the third quarter this year on an annual basis, a survey by the Global Property Guide shows. The Irish housing market remains the world's weakest performer. House prices were down 15.61% year-on-year, the steepest decline since 2008.  Quarter-on-quarter,Ireland's house prices slid 4.25%. Bulgaria registered the world's second-biggest fall in residential property prices from July to September, down by 9.65% year-on-year. It is one of several European housing markets, which experienced accelerated downturns during the year ending in the third quarter of 2011 - Netherlands (-5.20%), Portugal (-6.77%), Slovak Republic (-7.94%), Warsaw, Poland (-7.95%), Spain (-8.41%). on a quarterly basis however Bulgaria recorded a slim 0.11% decrease in housing prices. The world's second strongest quarter-on-quarter house price rise occurred in an unexpected city - Vienna, where house prices surged by 5.44% during the quarter (and +4.25% on the year), continuing 6 years of nearly unbroken price rises forAustria's capital. The Baltics have also performed strongly. India and Brazil' housing markets have continued their spectacular outperformance, with Delhi house prices up 22.68% during the year to Q3 2011,  according to National Housing Bank (NHB) figures. Brazil's Sao Paolo had the second highest house price rise in the world during the third quarter, with house prices up 5.88% during the quarter. The country is experiencing an unprecedented boom, not least because it is the host country for the World Cup in 2014 and the Olympics in Rio de Janeiro in 2016.

 

Bulgarian Economy Goes to Standstill

Bulgaria steps in European trend in delayed economic growth, still the country is far behind the best graders. Bulgarian economic growth keeps on staggering. The GDP has grown by 1.6% in the third trimester of the year compared to the same period in previous year, reported some from the National Statistical Institute. In the first and second trimester the GDP grew on an annual base respectively by 3.3% and 2%. Obviously the economic downward movement in Europe has reached finally Bulgaria. Compared to the previous trimester, the economic growth in the period from July to September was by 0.3% only. The data about Bulgarian economy do not differ significantly from those in the rest of the European countries. The countries doing better than Bulgaria are Estonia (7.9% annual growth), Lithuania (7.3%) and Latvia (5.3%) as well as Sweden (4.6%), Romania (4.4%) and Poland (4.2%). The produced GDP in Bulgaria in the 3rd trimester of 2011 totals to 21 billion levs, shows the data of the NSI. Per capita this makes 2,832 levs or US$ 2,047 from the GDP. For the 3rd trimester of 2011 the final consumption registers a growth of 0.3% compared to the 2nd trimester of 2011 but the investments drop by 13,5%. The economic growth in the 3rd trimester on an annual basis is mainly due to the good performance of industrial sector, the sale of cars, hotel and restaurants as well as the financial and insurance services.

 

Raiffeisenbank predicts a 1.2% economical growth for Bulgaria in 2012

Raiffeisenbank Bulgaria lowered its projection for Bulgarian economic growth in 2012 from 2.0% to 1.2% due to weaker exports and restricted foreign funding, according to the bank’s monthly macroeconomic report. If the euro area slides back into recession, Bulgarian economy will be affected, as it is closely integrated with the economies in the region. Duma daily informed.

 

Bulgaria’s industrial production speeds growth to 2.5% y/y in Oct 2011.

Bulgaria’s industrial production index increased by a real 2.5% on the year in October after rising an annual 1.5% in September, preliminary data of the statics office showed. The improvement was due to faster growth in the mining and extraction industry (up 13.5% y/y in October after increasing 7.7% y/y in September) and lower contraction in the utilities’ production (down 1.7% y/y in October after shrinking 5.3% y/y in September). The growth rate of the manufacturing industry remained almost unchanged on the year at 2.6% in October versus 2.68% in September. Metals production and extraction recovered as compared to a month earlier, expanding an annual 16.9% in October. The food industry’s output dropped 2.8% on the year in October after plunging an annual 10% in September. The number of industry segments, which posted annual growth in October, was 15 out of a total of 27, unchanged from the previous month. In seasonally-adjusted terms, the industrial production rose a monthly 0.4% after expanding 1% month-on-month in September. The working-day-adjusted data showed an annual increase of 2.4% in October versus a yearly expansion of 1.5% a month earlier. The industrial turnover index increased by a nominal 10.8% y/y as exports and domestic turnover went up by 23.9% y/y and 4.1% y/y, respectively.

 

Bulgaria’s construction output drops 10.2% y/y in Oct 2011

Bulgaria’s construction output declined 10.2% on the year in October, preliminary data of the statics office showed. The annual contraction narrowed marginally from a revised 10.8% in September. The volume of buildings construction dropped 4% on the year in October after shrinking an annual 5.8% in September. Civil engineering works went down by a yearly 18.1% in October after plunging 17.6% on the year in September. In seasonally adjusted terms, total construction output went up by 0.2% m/m on better results of the buildings construction segment, while working-days-adjusted data showed an annual contraction of 9.5% in October. 

 

Bulgarian government decides to exit Burgas-Alexandroupolis oil pipeline projec

The Bulgarian government said it has decided to exit the Burgas-Alexandroupolis oil pipeline project, it planned to develop jointly with Greece and Russia. The government said in a statement it will offer the tripartite agreement to be cancelled by mutual consent. In case such consent is not reached, Bulgaria will unilaterally leave the contract 12 months after its expiration. The project was designed to build and operate a pipeline for transportation of Russian oil from Bulgaria’s Black Sea port of Burgas to the Greek Aegean Sea port of Alexandroupolis. The decision of the Bulgarian government is based on an analysis that the pipeline could not be build under the conditions of the initial agreement reached in 2007. The cabinet said it will settle its BGN 12.8mn (EUR 6.5mn) debt to the international company in charge of the project via raising the capital of its local shareholder. In November, the Bulgaria’s environment ministry gave a positive assessment on the project’s environment impact and allowed the company in charge of the project, Trans-Balkan Pipeline, to proceed with the next step and organise public discussions in the affected regions. State-run entities of Bulgaria and Greece control 24.5% of the project each, while Russia owns the remaining 51%. The 258-km pipeline, which is designed to transport 35 million tonnes of oil annually with an option to later on increase supplies to 50 million tonnes, is estimated to cost EUR 1.6bn. 

INVESTMENTS:

 

Dundee: Bulgaria's Gold Mine Project Has 3.3 Year Payback

Dundee Precious Metals' investments in a controversial project for a big open-pitgold mine near the Bulgarian town of Krumovgrad will pay back in just a little more than three years, the company's final feasibility study shows. "We are pleased with the results of the new feasibility study on our Krumovgradproject which confirms the commercial and economic viability", commented Jonathan Goodman, President and CEO. "The Krumovgrad gold project has been designed to become a showcase for environmental responsibility, community relations and mine management that will allow us to create value for our shareholders and at the same time bring new economic opportunities into a great community," he added. The area below the prominent Ada Tepe hill is expected to have a mine life of nine years, assuming an annual operating rate of 850,000 tonnes ore and 31% internal rate of return. The company expects the average annual EBITDA (earnings before interest, taxes, depreciation, and amortization) to total USD 52.6 M. The project, which faces fierce opposition by the local community, was recently given a provisional go-ahead by the Bulgarian environment minister, who approved the company's environmental impact assessment. This allows the Canadian company to proceed with the permitting process for the construction of the process plant, the integrated mine waste facility and the open pit mine. Earlier this month the people living in the poor Bulgarian town of Krumovgradresumed their vehement protests against plans by Canadian mining companyDundee Precious Metals to open a big open-pit gold mine, spurred by the worldwide gold rush. "We have established an initiative committee, launched a sign-up and will not hesitate to approach the European Commission. We won't let them poison our lives and our land," Margit Vassileva, leader of the environment association "Life forKrumovgrad" told Trud daily. A group of European Commission experts are expected to come from Brussels and examine the situation on the field. The people from Krumovgrad and the nearby villages in the picturesque Rhodope mountains, predominantly ethnic Turks and Pomaks, are worried that the planned waste facility would be just one kilometer away from the town and one kilometer away from the river. "Toxic arsenic and heavy metals will be released directly into the Krumovitsa River, it will be poisoned," said Krumovgrad mayor Sebihan Mehmed, referring to the major supplier of drinking water and irrigation for the region, which is also part of the Maritza River Basin. "There will be blasts nearby, poisonous dust everywhere, which we will breathe in. I am shocked by the refusal of the Health Ministry to inform us about the risks for the human health that the gold mine will pose," the mayor added. The municipality and Green Balkans wildlife society have both challenged in court the granting of concession for gold-mining to Balkan Mineral & Mining, the Bulgariansubsidiary of Dundee Precious Metals. The complaints however were ignored by the Supreme Administrative Court and not considered. The Bulgarian cabinet gave on a 30-year concession the gold mine near the town of Krumovgrad to Dundee Precious Metals in February this year. The gold mine is located in the Krumovgrad municipality on lands of the villages of Guliya, Dazhdovnik, Zvanarka, Kaklitsa, Malko Kamnyane, Ovchari and Sarnak. The Toronto-based mining company has repeatedly assured that Krumovgradgold project will be beneficial for Bulgaria and the local community. Under mounting public pressure the Canadian company was forced to abandon plans for using cyanide technology after a Bulgarian court ruled against thecyanide gold extraction at the other mine operated by one Dundee's subsidiaries in the country, Chelopech Mining. The company has committed to invest USD 130 M in the project.

AES Geo Energy Plans 2nd Wind Park in Northeast Bulgaria

AES Geo Energy, a joint company between US energy giant AES and Bulgarian-German enterprise Geo Power is planning to build a second wind power park inNortheastern Bulgaria, Geo Power Manager Thomas Funke has announced. Back in 2009, AES and Geo Power opened the largest wind energy plant in Southeastern Europe, the St. Nikola Park near Bulgaria's Kavarna, with a total capacity of 156 MW. However, Funke told BTA Monday that the St. Nikola Park is still working at 80% of its capacity because of problems with the capacity of the Bulgarian power grid. In his words, at the time of the launch of the AES Geo Energy plant, Bulgaria's National Electric Company NEK was not ready to handle the new electricity generation capacity; thus, the St. Nikolas Wind Park is expected to reach 100% of its production capacity once two electricity distribution stations – in the village of Vidno near Kavarna and near the city of Dobrich – are completed. once we are convinced that NEK is in the position to handle the entire amount of electricity that we can produce, within a year and a half we will be ready to build the new wind park," Funke stated, as cited by BTA. However, he has not revealed the projected capacity of the planned new wind power facility. He noted that in the past 1.5 year since its launch, the staff of the St. Nikola wind power facility have acquired valuable experience about the functioning of the wind park. The St. Nikola park employs 6-7 people as service personnel and 18-20 technicians who are representatives of the producer of the wind turbines. Geo Power Manager Thomas Funke has been working in the field of wind energysince 1998. He came to Bulgaria in 2003 when the country still had no legislation aboutrenewable energy. The AES Geo Energy company was founded by Geo Power and AES in 2006.

 

 

COMPANIES AND INDUSTRIES:

 

E.ON Left Bulgaria Due to Hostile Climate - Analysts

German company E.ON has decided to shed its Bulgarian power utilityE.ON Bulgaria due to an overregulated market and political attacks by senior government officials, according to Bulgarian comentators. Saturday it was announced that E.ON Bulgaria is being sold to Czeck Energo Pro for EUR 133 M. The decision to sell E.ON Bulgaria, which was announced earlier, most probably stems in part from the heavy regulation on the sector in the country, as well as criticisms topower utilities on the part of Bulgarian PM Boyko Borisov, writes Dnevnik.bg. The site also mentions a new global strategy announced by E.ON last year, which includes moving away from "non-competitive markets" in Europe to more vital ones in Russia and South America. In 2010, the Bulgarian State Commission for Energy and Water Regulation conducted an audit on the country's power utilities at the request of PM Borisov. The audit check found that all three utilities - E.ON, CEZ and EVN - had irregularities in electricity price-formation and fined them. E.ON entered Bulgaria in 2007 by paying EUR 140.7 M for 67% of the state powerdistribution companies in Varna and Gorna Oryahovitsa. Czech company Energo Pro, which has now bought the business, specializes inhydro power production and electricity from other renewable energy sources. It has a branch in Bulgaria, Energo Pro Bulgaria, which operates eight hydro powerplants and is the largest hydro power producer in the country.

 

Bulgarian Firms Upbeat on Exports but Write Off EU

Some 60% of the companies in Bulgaria expect an upswing in their exports, according to a survey of the Bulgarian Chamber of Commerce and Industry(BCCI). At the same time, however, the increase in export demand for Bulgarian goods is expected to come from non-European destinations such as foreign markets described as "traditional" (prior to 1990 – editor's note), pointed out BCCI Chair Tsvetan Simeonov, who presented the results of the survey. "There is no doubt that we cannot expect a growth of the sales of Bulgarian goods in Europe. That is why Bulgarian enterprises are turning towards their traditional markets where there is a potential for recovery. The opportunities for increasing Bulgarian exports to Asia as well as the Arab world are enormous," Simeonov noted, as cited by DarikFinance. According to the BCCI head, Bulgarian companies can find large market niches in Libya, especially when it comes to construction. What is more, Libyans feel "remorseful" towards Bulgaria for the notorious Libyan HIV trial of the six Bulgarian medics in 1999-2007, and would like to compensate Bulgaria, Simeonov believes. "Arab countries are solvent – regardless of the temporary difficulties that they have because of the revolutions there. They will be seeking foreign assistance for reconstruction and construction – and these are precisely the sectors in Bulgaria that are seeing a downturn," he stressed.

At the same time, however, Simeonov noted that the interest of Bulgarian companies towards doing business with Brazil has cooled down in spite of the initial enthusiasm. "We cooled off about Brazil. There was great enthusiasm at the beginning but now there is no motion. Brazil as well as Argentina are enormous markets, and we will outline specific measures for boosting the Bulgarian exports in that direction," he explained. Regardless of their optimism for exports, Bulgarian employers are relatively pessimistic about the labor market, the BCCI study shows. only 36% of the firms in Bulgaria expect greater new investment regardless of whether it is foreign or made by local enterprises.

 

Bulgarian companies expect growth in 2012 export revenue - poll

Nearly 60 per cent of the companies polled by the Bulgarian Chamber of Commerce and Industry (BCCI) expect to see export revenues increase in 2012, Bulgarian news agency BTA said on December 5 2011, citing data from the survey conducted in October. A third of those polled believe that revenues will remain at 2011 levels, while 13 per cent expect a decline. The European economic review by EUROCHAMBRES, of which BCCI is a member, shows that Bulgarian firms have the second-highest growth expectations for revenues from sales abroad. Portuguese businesses top the list, while companies from the Czech Republic and Hungary are the most pessimistic. With regard to expectations for domestic sales growth, Bulgaria ranks third after Turkey and Poland, with Portugal and Greece making up the gloomy camp. According to BCCI president Tsvetan Simeonov, Bulgarian export-oriented companies would do well not to pin their hopes on Europe in 2012 given the ongoing crisis on the continent. Prospects for Russia are also on the bleak side in light of the country’s trade barriers for EU goods. Simeonov recommends that Bulgarian firms focus on other traditional export markets, citing as examples Asia and the Middle East, as well as Libya. He also sees Brazil and Argentina as markets of considerable potential.

 

LG Electronics expects 7%-10% rise in 2012 sales in Bulgaria.

South Korean company LG Electronics sees its sales in Bulgaria growing 7%-10% in 2012 thanks to bigger demand for TV sets, the managing director of the company's Bulgarian unit, Ivan Ivanov, told news agency investor.bg. The sales of the household electrical appliances are expected to stabilise in 2012 after stagnating in the past two years. They have declined by 20% in 2011. 

 

Sales of drugmaker Sopharma drop by 23% y/y in November 2011

The sales revenue of leading local pharmaceutical producer Sopharma declined by 23% y/y in November, including 29% y/y exports contraction and flattening of the domestic market sales, the company said in a note, posted on the website of the local stock exchange. In October, sales flattened in annual terms after falling by 22% y/y in September. Total sales have decreased by 2% y/y in Jan-Nov, including export sales decline of 2% y/y and contraction of the domestic market by 1% y/y. The net profit of the local leading pharmaceutical producer Sopharma dropped by 19% y/y to BGN 29.4mn (EUR 15mn) in Jan-Sep and the deterioration expanded from 15.7% y/y in H1, according to the consolidated financial report. 

Dobrich municipality prepares EUR 57.8mn water cycle project

The municipality in the northeast city of Dobrich has prepared and submitted to the environment ministry a project for rehabilitation and modernisation of the water cycle in the city, the ministry informs in a note on its website. The value of the project is BGN 113mn (EUR 57.8mn) and should be approved by the ministry as well as the EC because it exceeds BGN 100mn. The municipality plans to rehabilitate more than 77km of water pipeline, above 4km of sewers, to reconstruct three channel-pumping stations and upgrade a wastewater treatment plant. The project, to be financed with EU funds under the environment operational programme, will improve the life of more than 100,000 citizens by the end of 2014. 

 

Bulgaria opens tender for EUR 37.8mn section of Sofia ring road

The Bulgarian road infrastructure agency has opened a tender for the construction of a BGN 74mn (EUR 37.8mn) stretch of the ring road around the capital Sofia, news portal Investor.bg reported. The section is 3-kilometre long. Interested companies and consortia can place their bids until January 26, 2012. The agency will open the offers on January 27. 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea