불가리아 주요 경제 뉴스 (6 - 13 January 2012)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (6 - 13 January 2012)

 

Sections/headline briefs:

 

 

MACROECONOMY:

Ø  Bulgaria 3rd in EU Retail Drop for 2011 – Eurostat   

Ø  Consumption Starting to Power Up Bulgaria's Economy - Raiffeisenbank

Ø  Retail sales in Bulgaria drop 5.3% y/y in November 2011 – Eurostat

Ø  Bulgaria 2011 arms sales $380 million: report

Ø  Financial Analysts Project GDP Growth of 1.5 % in 2012

Ø  Bulgarian government to decide onBelene nuclear project in three weeks– PM

 

INVESTMENTS:

Ø  HP, EVN, Lufthansa Technik Grab Bulgaria's 2011 Investment Awards

Ø  UniCredit Forecasts Renewed Investment Interest in Bulgaria  

 

COMPANIES AND INDUSTRIES:

Ø  Bulgaria’s construction output drops 10.7% y/y in Nov 2011

Ø  BTC says cell phone subscribers rose more than 30% in 2011

Ø  Bulgaria’s industrial production growth slows to 0.6% y/y in Nov 2011

Ø  Finland’s textile service companyLindstroem buys Bulgarian peer Mr.Mat   

Ø  Bulgarian PM: Shelve Renewable Energy Projects Until Technologies Get Cheaper  

Ø  Delhaize to Close 6 Piccadilly Chain Stores in Bulgaria  

 

 

 

 

 

 

Articles:

 

MACROECONOMY:

Bulgaria 3rd in EU Retail Drop for 2011 – Eurostat   

Bulgaria is in the top tier of EU member states with the most dropped down volume of retail trade for last year, according to a recently released Eurostat study. Retail in Bulgaria for 2011 has dropped by 5.3%, as compared with the previous year. Bulgaria is precede by Portugal, where retail dropped by 9.2%, and Spain, where there was a decrease by 7%. As a whole, retail in the EU has dropped with 1.3%, and that in the eurozone - with 2.5% on a yearly basis. On a monthly basis, comparing November and October 2011, the largest drops have been in Portugal, Malta and Romania, while the highest increases were noted in Lithuania, Ireland and Latvia.

 

Consumption Starting to Power Up Bulgaria's Economy - Raiffeisenbank

Domestic consumption has become the main engine of economic growth in Bulgaria is the third quarter of 2011, according to data presented in the monthly macroeconomic analysis of Raiffeisenbank Bulgaria. The third quarter saw a shift in the structure of growth in the Bulgarian economy, with domestic demand now being the most powerful factor, the analysts of Raiffeisenbank Bulgaria said in their report published Monday. In the third quarter, Bulgaria's economy grew by 2.3% year-on-year. At the same time, savings have seen a decline as a share of GDP for the first time since the start of the economic crisis in 2008, with indications that demand will remain the primary factor for growth in Bulgaria in the fourth quarter. The Raiffeisenbank economists stressed that Bulgaria had surprisingly low inflation in November. "However, it would be hard to allege that the reason for that is a sharp drop indemand. What is more, since Bulgaria's trade balance in October was negative as a result of the steep increase of imports, rather, it is logical to expect that the data for Q4, which are to be published, will demonstrate a continuing recovery of domestic demand," the report said. "Against the backdrop of the shocks in Europe, the development of the Bulgarian economy seems stable, though it is far from what is desired. Public finances are in a very good condition, labor productivity has grown by more than 5% for a sixth consecutive quarter, and there is a rise in consumption," commented Raiffeisenbank Bulgaria's chief economist Kaloyan Ganev. "However, the positive rate of GDP growth should not be overstated since there are still serious problems in the economy which haven't been overcome. For example, the growth in investments in the third quarter of 2011 is entirely due to the accumulation of reserves, and not to investments in major capita," he explained. "It is hard to interpret this fact as a signal that the economic cycle is turning around since it might be the result of overestimated sales potential by traders. Foreign direct investment in processing industry is declining, which shows that companies prefer to pay off their old debts instead of making new investments in manufacturing. Let's not forget the condition of the labor market and the risks for the Bulgarian economy coming from the euro zone," Ganev added.

The macroeconomic report of Raiffeisenbank Bulgaria pointed out that domesticconsumption increased by 5% in Q3, replacing exports as the leading contributor to the GDP growth. Savings declined to 25.1% for the first time since the start of the recession. Bulgaria's November inflation went up 0.3% compared with October, driving down the average yearly inflation to 4.4%. In the third quarter, Bulgaria's labor productivity went up by 5.7% year-on-year, the sixth consecutive quarter with a growth greater than 5%. Bulgaria's budget deficit in the first 11 months of 2011 reached 1.4% of the GDP, which is substantially lower than the 2.5% projection for the year. The fiscal reserve amounted to BGN 5.3 B. Raiffeisenbank reminded that in December Fitch Ratings confirmed Bulgaria's credit rating at BBB-, changing it from a positive to a stable perspective, and Standard&Poor's confirmed Bulgaria's rating at BBB, preserving its stable perspective.

Retail sales in Bulgaria drop 5.3% y/y in November 2011 - Eurostat

The volume of retail sales declined for a sixth month in a row by 5.3% y/y in November and the contraction accelerated further from 5.2% y/y in October, Eurostat data showed. The indicator has been falling in annual terms in each month since February 2009 until March 2011 when it turned to growth. The positive trend sustained for three consecutive months. In monthly seasonally-adjusted terms, the index fell by 0.6% in November decelerating from 0.8% in October. In all the 27 EU member states, retail sales contracted by 1.3% y/y as compared to a decline of just 0.1% y/y a month earlier. IntelliNews comment: The relatively high unemployment level and the economic environment uncertainties are to continue to prevail in the next months thus pressing down private consumption levels. Wage incomes are still rising but households rather prefer to accumulate precautionary savings. According to the latest business sentiments survey from early December, the managers from the retail business do not expect significant changes in the business in the next six months and economic uncertainties as main impediment for the business hit historical record high value of 81.5%. The national statistical institute will publish detailed data today (January 9). 

 

Bulgaria 2011 arms sales $380 million: report

Bulgaria's defence industry has escaped unscathed from the general economic crisis, with its exports hitting $380 million (300 million euros) in 2011, Pressa newspaper reported Thursday. It cited figures by the Bulgarian Defence Industry Association (BDIA), which are usually kept secret. The organisation, which groups Bulgaria's major arms and munitions makers, refused to specify where its sales went to. The newspaper however cited Algeria, Afghanistan, the United States and Iraq as traditional buyers of Bulgarian light weapons and ammunition. Bulgaria's defence industry exports had stood at $200 million in 2008, Pressa said citing data from the same association. "It is still hard to compare the situation with the years before (the fall of communism in) 1989," BDIA co-chairman Stefan Vodenicharov told the newspaper.
Before the end of communism, Bulgaria's armaments industry was around 10 times the size it is now, employing 115,000 people and shipped abroad an annual $700 to 800 million worth of armaments -- at prices from then. But the advent of democracy, the disbanding of the Warsaw Pact and a number of international arms sales embargoes to countries in Africa and the Arab world plunged the industry into a deep crisis in the 1990s. The majority of production facilities have since been privatised with the government recently selling its remaining stock in the Arsenal Kazanlak light arms and munitions plant, the only licensed producer of Russian Kalashnikov assault rifles during the Cold War. It had also prepared a strategy to soon put on the table its biggest defence firm to remain fully state-owned, VMZ Sopot.

 

Financial Analysts Project GDP Growth of 1.5 % in 2012

According to UniCredit Bulbank experts, GDP growth in 2012 will be 1.5 per cent, which however means economic slowdown compared to 2011 when GDP increased by 2 per cent, the bank said in a press release. The deterioration of external conditions will have a negative impact on the export. Apart from that, the problems in Europe will put additional pressure on the financial indebtedness in the corporate sector which is shrinking. This year the companies will gradually start unfreezing their investment projects which will have a stabilizing effect on the employment rate. The expectations for a sustainable employment growth, however, are focused rather on the period after 2013, the analysis said. An obstacle to the recovery of the Bulgarian economy in 2012 will be the continuing drop in the prices of homes, which is an indicator of the yet weak end-consumer demand by households. According to the analysis we can expect two or even three years in which the Bulgarian economic growth will remain below its potential with alternating periods of speeding up and slowing down of recovery rates.

 

Bulgarian government to decide onBelene nuclear project in three weeks– PM

PM Boyko Borisov said in an interview for the state TV channel BNT that the government will take the final decision whether to continue the project for the construction of a 2,000 MW nuclear power plant in the Danube town of Belene in three weeks, Capital Daily informs. The project’s consultant, UK’s HSBC, should announce its opinion on the project by the end of January. In February 2008, Russia’s Atomstroyexport, part of the state Rosatom, signed a EUR 4bn preliminary contract to build the 2,000 MW nuclear power plant. In December 2010, the maximum price for the construction of the nuclear power plant was set at EUR 6.298bn. In early October 2011, the state-run National Electricity Company (NEC) and AtomStroyExport signed 14th annex to the preliminary contract for the construction of the nuclear plant in Belene delaying the final decision on the project by six more months until Mar 31, 2012. Earlier this month, the state Nuclear Regulatory Agency said that the Belene project envisages much more reliable protection against disasters than most plants currently in operation.

 

INVESTMENTS:

 

HP, EVN, Lufthansa Technik Grab Bulgaria's 2011 Investment Awards

The InvestBulgaria Agency has awarded for a sixth year in a row Bulgaria's top investors for 2011 in five different categories at a special ceremony in Sofia. Hewlett-Packard is Bulgaria's No. 1 investor in the category for creating high-added value jobs. In 2011, HP Bulgaria opened a total of 1 150 jobs as part of the expansion of its HP Global Delivery Center Bulgaria – HP GDC in Sofia, originally announced in 2010. The average monthly salary at HP GDC is over BGN 2 400, and the average insurance income is BGN 1 942 – well above Bulgaria's average figures. Lufthansa Technik has grabbed the prize in the asset investment category for large companies. In 2011, Lufthansa Technik invested a total of BGN 25.5 M in its repair facility in Sofia serving aircraft from all over Europe. The asset investment category for small and medium-sized enterprises has been topped by Finnish investor Amer Sports, one of the largest global producers of sports gear. In 2011, Amer Sports Bulgaria invested BGN 7.7 M in its ski production factory in the mountain town of Chepelare. Asarel Medet Jsc, a copper mining and processing company based in the town of Panagyurishte, won the Investor of the Year award in the "Green Investment" category for investing BGN 140 M in two innovative projects for copper processing. Power utility EVN Bulgaria received the prize in the category for innovations by investing BGN 69.8 M in the new co-generation plant of the Plovdiv-North thermal power plant, inputting technologies that are novel not only for Bulgaria but for the entire Balkan region. "There was a great variety of investment projects in almost all sectors. This comes to demonstrate that even in a hard year such as 2011 firms haven't given up at all on investing in Bulgaria," the CEO of the InvestBulgaria Agency Borislav Stefanovdeclared at the award ceremony as cited by the Capital weekly. A total of 30 companies took part in the race for Bulgaria's 2011 investment awards; their projects were evaluated by a seven-member jury.

 

UniCredit Forecasts Renewed Investment Interest in Bulgaria  

Investment interest towards Bulgaria is set to start growing slowly after the summer of 2012, according to the chief economist of UniCredit Bulbank Kristofor Pavlov. The increased messages about the resolving of the euro zone crisis, and especially the reduced likelihood that Greece will abandon the euro are going to be an indication for the Bulgarian companies and households, Pavlov told the Euroclub at the Bulgarian Chamber of Commerce and Industry on Wednesday. "First of all, however, the improvement of outside conditions will influence the Bulgarian economy through the channeling of expectations," he stated. The chief economist of UniCredit Bulbank stressed that employment will be stabilized by the unfreezing of firms' investment projects in 2012 but that a more tangible improvement in the employment environment is to come after 2013. "Households will start changing their attitude by putting off less their purchases of long-term goods. In accord with the increase of the consumer demand, the demand for credit will start growing relative to the unsatisfactory levels at present," Pavlov explained. According to UniCredit Bulbank, Bulgaria's quarter-on-quarter growth rate will grow to 0.5%-0.7% in the last two quarters of 2012, up from the almost zero quarterly growth at the end of 2011. Its GDP growth forecast for Bulgaria in 2012, however, is 1.5%, which is lower than the 2% that the country achieved in 2011. "The start of the year will test the Bulgarian economy. The worsening external environment will affected exports negatively," Pavlov said, stressing that the declining real estate prices will be one of the hurdles for the Bulgarian economy. "We have ahead of us two or even three years in which Bulgaria's economic growth will be lower than its potential, with alternating periods of slowdowns and growth," he explained.

 

 

COMPANIES AND INDUSTRIES:

Bulgaria’s construction output drops 10.7% y/y in Nov 2011

Bulgaria’s construction output declined by 10.7% y/y in November, preliminary data of the statistics office shows. The annual contraction accelerated marginally from 10.2% in October. The volume of buildings construction dropped by 4.8% y/y in November as compared to a decline of 4.3% y/y in October. Civil engineering works went down by 18.4% in November speeding slightly from 18% y/y in October. In seasonally adjusted terms, total construction output went down by 0.4% m/m on better results of the civil engineering works which showed an expansion of 0.3% m/m, while according to working-days-adjusted data the contraction was reported at 10.3% y/y in November. 

 

BTC says cell phone subscribers rose more than 30% in 2011

Country's largest telecom services provider, BTC, traded as Vivacom, informs on its website that the number of its cell phone subscribers has increased by more than 30% last year. The company, however, has not unveiled any absolute figures. Wireless data traffic soared by more than 10 times and the number of the respective subscribers surged by above 230% last year. As a result, the usage of smartphones in the BTC network expanded by more than 50%. The company says its 3G network has covered almost 98% of the country's population. Earlier, BTC announced that the state telecoms commission allowed it to start tests of its 4G network and unveiled plans to build the network under the LTE standard in the capital city of Sofia in three months. In October last year, BTC informed that it has started a BGN 600mn (EUR 306.8mn) investment programme to develop its services and broaden its infrastructure over the next three years. 

 

Bulgaria’s industrial production growth slows to 0.6% y/y in Nov 2011

Bulgaria’s industrial production index increased by real 0.6% y/y in November after rising by 2.5% in October and 1.5% y/y in September, preliminary data of the statics office shows. The growth was driven by the utilities sector only, which increased by 10.5% y/y in November after falling by 1.8% y/y a month earlier. At the same time, both the mining and the manufacturing posted declines of 7.4% y/y and 1.4% y/y in November, respectively, as compared to growths of 13.3% y/y and 2.7% y/y in October. The declines in food and clothing, and paper production deepened during the month and the manufacturing of chemical products, plastics, and minerals turned to contraction. The number of industry branches, which posted annual growth in November, was 13 out of a total of 27, as compared to 15 in the previous month. In seasonally-adjusted terms, the industrial production fell by 0.4% after expanding in October. The working-day-adjusted data showed an annual increase of 0.6% in November but decelerated from the October rate of expansion. The industrial turnover index increased by nominal 9.9% y/y as exports and domestic turnover went up by 12.3% y/y and 8.5% y/y, respectively. Industrial production data confirms our expectations that GDP growth has slowed down further in Q4 last year but at the same time shows that the country’s economy has not yet been affected very seriously by the downturn in the EU countries, Bulgaria’s main trading partners. 

 

Finland’s textile service companyLindstroem buys Bulgarian peer Mr.Mat

Finland’s textile service company Lindstroem has bought the operations of the local company supplying mats services Mr. Mat, Lindstroem informs in a note on its website. Lindstroem intends to strengthen its position as mat market leader on the local market. Lindstroem established its local arm in 2008 to offer workwear services to corporate customers. In 2010, the company started offering mat services as well and in June 2011 it acquired another local mat service company - Euroclean. Lindstroem plans to open new sales positions in the country. Lindstroem Group operates in 20 countries from Europe and Asia.

 

Bulgarian PM: Shelve Renewable Energy Projects Until Technologies Get Cheaper  

Bulgaria must not rush the installation of new renewable energy capacity until the technologies become cheaper and are built of locally-produced components, saidPrime Minister Boyko Borisov at a Thursday meeting with members of theAmerican Chamber of Commerce in Bulgaria. "I do not want Bulgarians paying for expensive renewable energy. At this stage, nothing obliges us to integrate wind farms and solar parks into the existing power grid because they are now quite costly," the Prime Minister told representatives of US companies, according to reports of news portal dnevnik.bg. He further reminded that Bulgaria had made a commitment to achieve 20% of energy from renewable sources by 2020 and assured that the country would stick to its pledge. Borisov said the decision of major companies to produce alternative energy was by no means not random but was based on the fact that it traded at BGN 580/MWh, while the energy produced by Kozloduy NPP sold for BGN 42/MWh. "It is not in the interest of Bulgarian citizens to see power rates rise constantly due to the expensive eco-friendly energy. The fact that we have a deadline by 2020 to comply with the target, by when the technologies will most probably be cheaper, defends the interests of Bulgarian citizens," Borisov told journalists after the meeting. The Prime Minister remarked that his bold statement would probably earn him reprimands from businessmen. "We must know our capabilities and you must stop pressuring the State Energy and Water Regulatory Commission (DKEVR) and the Ministers on that matter. I am the one who does not want Bulgarian citizens paying for expensive energy," the Prime Minister stated. Borisov's comments came on the heels of the announcement of DKEVR Chair Angel Semerdzhiev that the watchdog had used up all options for keeping electricity prices low.

 

Delhaize to Close 6 Piccadilly Chain Stores in Bulgaria  

The Belgium-based company Delhaize Group has announced it is going to shut down six stores from the Piccadilly retail chain in Bulgaria. Delhaize is also going to shut down the only Tempo hypermarket in Bulgaria, which is located in Sofia, by the end of 2012. The Belgian group is undertaking a plan to optimize its portfolio, which provides for closing a total of 146 stores with unsatisfactory results in Europe and the USA, and for transforming another 64 stores. Thus, in addition to the Tempo hypermarket in Sofia, by the end of 2012, Delhaizeis going to do away with one Piccadilly store in each of the following Bulgarian cities:Ruse, Stara Zagora, Yambol, Varna, and Plovdiv, as well as one PiccadillyExpress store in Plovdiv. As a result of the closures, 99 people will be laid off even though those working inPlovdiv and Varna will be offered to be relocated to another facility. At the same time, however, Delhaize Bulgaria has confirmed that it will continue to open new stores. "Our actions will strengthen our market performance, and will allow us to focus on our strategy of successful and profitable growth," the COO of Delhaize Bulgaria Erikyan Lantink said in a media statement. Delhaize has a total of 38 Piccadilly, Piccadilly Express, and Tempo stores in Bulgaria, and employs more than 2 600 people. In April 2011, the Bulgarian Competition Protection Commission (CPC) gave the green light to the acquisition of a 100% stake in Serbian Delta Maxi Group, owner of thePiccadilly retail store chain operating in Bulgaria, by Belgium-based companyDelhaize. The deal price was EUR 932.5 M along with net debt of around EUR 300 M

 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea