불가리아 주요 경제 뉴스 (13 - 20 January 2012)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (13 - 20 January 2012)

 

Sections/headline briefs:

 

 

MACROECONOMY:

v  Bulgaria's Construction Output Drops by 10% Y/Y Nov 2011  

v  WB cuts Bulgaria’s growth forecast to 1.9% in 2011, 1.2% in 2012

v  Bulgarian parliament bans shale gas prospecting, exploration by fracking

v  Bulgaria's consumer inflation slows down to 2.8% y/y in December 2011

 

INVESTMENTS:

v  Bulgaria Got EUR 740 M FDI in Jan-Nov 2011

v  German Investors Show Interest in Biomass Production in Bulgaria

 

 

COMPANIES AND INDUSTRIES:

v  Smartphone users in Bulgaria rise by 42% in 2011 

v  Telekom Austria eyes Bulgaria's Vivacom - report

v  EVN to restart construction of wind-power park in Bulgaria this year

v  Energo-Pro Buys Power Distribution Company from E.oN

v  Sofia airport passenger traffic up 5.4% y/y in 2011

v  New passenger car registrations in Bulgaria rise 22.3% in 2011

 

 

 

 

 

 

Articles:

 

MACROECONOMY:

Bulgaria's Construction Output Drops by 10% Y/Y Nov 2011   Bulgaria's construction output decreased by 10.2% in November 2011 year on year, the second largest fall among the EU member states for which Eurostat has available data. Portugal registered the largest annual decrease in its construction output in November – by 12.2%, while Slovenia saw a 10.0% drop. On an annual basis, among the member states for which data are available for November 2011, construction output rose in six and fell in eight. The highest increases were registered in Romania (+16.9%), Poland (+14.7%) and Germany (+9.9%) The highest monthly increases were registered in Slovenia (+23.1%), Hungary (+7.4%) and Germany (+4.5%). In the construction sector, seasonally adjusted production1 rose by 0.8% in the euro area and by 0.4% in the EU27 in November 2011, compared with the previous month. In October3, production fell by 1.4% in the euro area and by 0.9% in the EU27. Compared with November 2010, output in November 2011 increased by 0.2% in the euro area and by 0.7% in the EU27.

 

WB cuts Bulgaria’s growth forecast to 1.9% in 2011, 1.2% in 2012

The World Bank (WB) has estimated that Bulgarian GDP has increased by 1.9% last year and the growth will slow down further to 1.2% this year before recovering to 3.3% in 2013, according to the report Global Economic Prospects 2012. In November 2011, WB projected that the economic growth would reach 2% both this and next year in its EU-10 Regular Economic Report, lowering its forecasts from 2.5% in 2011 and 3.4% in 2012 published in its previous report from November 2010. According to the WB’s latest report, the CA will show a surplus of 2% of GDP in 2011, which will turn to a deficit of 1% of GDP this year expanding to 2.2% of GDP in 2013. The institution comments that Bulgaria is among the countries, which would be affected by weaker activity in the EU as it is country’s major trading partner. The WB projects economic growth of 5.4% for developing economies in 2012 and 1.4% for the developed countries, respectively, down from 6.2% and 2.7% forecast in June 2011.

 

Bulgarian parliament bans shale gas prospecting, exploration by fracking

The parliament imposed a ban for indefinite period on prospecting and exploration of shale gas using the method of hydraulic fracturing or similar methods, investor.bg informs. The decision has been approved by 166 of the lawmakers, 6 were against it and 3 of the deputies abstained. All companies, which already hold permits to prospect and explore under the said method should prepare alternative projects excluding hydraulic fracturing, otherwise they will lose their licenses. The state will impose a BGN 100mn (EUR 51.1mn) fine on all companies, which violate the ban.  A day earlier, the government banned gas prospecting and exploration using hydraulic fracturing and withdrew its decision to allow the US oil company Chevron to explore shale gas deposits on a 5,000 sqm land plot near Novi Pazar in the northeast part of the country. Chevron planned to invest EUR 50mn in the project under a 5-year contract and pay EUR 30mn for the permit to the state. Economy and energy minister Traykov has said that the shale gas deposits in the country are ranging between 300bn and 1trn cubic metres, according to preliminary estimates of interested in exploration companies. The ban follows a number of protests against shale gas exploration on environment and health issues.

 

Bulgaria's consumer inflation slows down to 2.8% y/y in December 2011

Bulgaria’s consumer price inflation decelerated to 2.8% y/y in December from 3.1% y/y in November, the statistics office reported. The rate is much slower than 4.5% y/y, recorded at the end of 2010. In monthly terms, consumer prices rose by 0.1% in December. The prices of food, alcohol and tobacco, housing and utilities, furnishings, healthcare services, free-time activities, and hotels and restaurants pushed up the overall index during the month. In 2011, the annual average inflation reached 4.2%. The EU harmonised inflation index (HICP), used as a benchmark for the euro adoption, also slowed down to 2% y/y in December from 2.6% y/y in November. In monthly terms, HICP rose by 0.3%. The year-average inflation reached 3.4% in 2011, up from 3% in 2010 but slightly below the government projection of 3.8%. The government expects HCPI inflation to slow down to 2.8% at the end of 2012 and to an average of 3.2% in 2012. According to the latest business sentiments survey from early December, the companies from the retail and the services business see opportunities for prices reduction in the next months. 

 

 

INVESTMENTS:

Bulgaria Got EUR 740 M FDI in Jan-Nov 2011

Bulgaria's FDI in Jan-Nov 2011. Source: BNB

Bulgaria's total foreign direct investment in Bulgaria for January – November 2011 amounted to EUR 740.3 million (1.9% of GDP), according to preliminary data of theBulgarian National Bank published Monday. This is an almost 50% slump compared to Bulgaria's total FDI of EUR 1.432 B (4% of GDP) for January – November 2010. 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 – November 2011 amounted to EUR 850.1 M. It decreased by EUR 523 M compared to that attracted in the same period of 2010 (EUR 1.373 B). Bulgaria's receipts from real estate investments of non-residents amounted to EUR 224.5 M, a slight increase compared to EUR 204.8 M attracted in January – November 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 194 M in January – November 2011, compared to a negative other capital, net of EUR 30.3 M in January – November 2010. Based on preliminary data on profit/loss, Bulgaria's reinvested Earnings (the share of non-residents in the undistributed earnings/ loss of the enterprise) in January – November 2011 were estimated at EUR 84.2 M, compared with EUR 88.6 M in the same period of 2010. By country, the largest direct investments in Bulgaria for the period January – November 2011 were those of the Austria (EUR 327.3 M), the Netherlands (EUR 313.1 M) and Russia (EUR 168.1 M). The largest negative flows for the period were towards Germany (EUR -174.1 M) and the United Kingdom (EUR -203.3 M) mainly due to net payments on intercompany credits in accordance with the loan repayment schedules of enterprises. According to preliminary data in January – November 2011 Bulgarian direct investment abroad amounted to EUR 130.9 M, compared to EUR 181 million in January – November 2010.

 

German Investors Show Interest in Biomass Production in Bulgaria

German investors have shown interest in biomass production in Bulgaria, according to Agriculture Minister Miroslav Naydenov, who is on a visit to Berlin. Naydenov will visit Green Week Berlin 2012, an international exhibition for the food, agricultural, and horticultural industries. In his Thursday statement, as cited by the Bulgarian National Radio (BNR), he reminded that Bulgaria had already fulfilled its commitment for renewable energy production by virtue of wind farms and solar parks, but it had huge untapped potential for using wood waste to produce electricity and heat. Naydenov drew attention to the fact that almost no sanitation felling was done in Bulgaria, despite the fact that it was highly necessary and beneficial for the forests. If conducted on a regular basis, the removal of diseased trees could yield energy equal to Kozloduy NPP's output for a year. Naydenov announced that Bulgaria was currently producing 5 million cubic meters of lumber per year but ought to produce at least double the amount. He said that the remaining wood left to rot in the forests could be used in biomass plants, of which Bulgaria had none, which German investors saw as a market niche. Bulgaria's Agriculture Minister stressed that biomass energy was cheaper than the renewable energy produced by wind farms and solar parks. He explained that it was economically profitable to make small installations situated 40-50 kilometers away from the source of wood. The issue of biomass was also brought up during Wednesday's meeting between Prime Minister Boyko Borisov ands representatives of the German business sector, with Borisov declaring the renewable energy technology a firm priority. on Thursday Naydenov also revealed that German producers of agricultural equipment and tractors had also shown interest in Bulgaria and voiced hopes that Germany would back Bulgaria's plea that the EU clear the allocation of state subsidies for the segment. Asked if Bulgaria had the potential to develop energy crops, he advised investors to not focus on this type of crops but to to go for plants traditionally grown in the country. Regarding the Common Agricultural Policy (CAP), Naydenov said that Bulgaria and Germany had very similar stances, with both countries supporting a gradual shift to renewable energy, support for beginning farmers and simplified procedures.

 

COMPANIES AND INDUSTRIES:

Smartphone users in Bulgaria rise by 42% in 2011

The users of smartphones have increased by some 42% last year to 1.04mn at the end of December, according to data of Mobile Review quoted by investor.bg. They accounted for more than 12% of all cell-phone subscribers. The number of the used every day personal call phones and other GSM/3G devices has reached some 8.5mn at the end of last year amid population of 7.36mn as of February 2011. Some 25-30% of the SIM cards are used in second or third devices. Mobile Review has estimated that some 10% of the population does not possess cell phones. 

 

 

Telekom Austria eyes Bulgaria's Vivacom - report

Telekom Austria, which owns Bulgaria's largest mobile carrier Mobiltel, was interested in the acquisition of Vivacom, reports in Austrian media have claimed. According to Die Presse newspaper, which did not quote any sources, the sole dissenting voice in Telekom Austria's management opposing the deal was chief financial officer Hans Tschuden, who feared a repeat of the Belarus scenario, where the devaluation of the local currency has put the company in difficult straits following the acquisition of a local carrier. Because Telekom Austria already owned Mobiltel in Bulgaria, its prospective acquisition of Vivacom could run afoul of competition authorities, which is why the Austrian company was contemplating a break-up of Vivacom. Telekom Austria would keep the fixed-line and broadband business, but spin-off and sell the mobile operations. Since its launch in 2005, Vivacom's mobile operations have struggled to catch up with Mobiltel and Cosmote's unit Globul, languishing at about 12 per cent market share. According to Die Presse, the sale of the mobile business would cover much of Vivacom's acquisition cost. Despite falling revenues in the fixed-line business, Vivacom, the former state fixed-line monopoly, still dominated the segment. The company was also one of the largest providers of broadband internet, using ADSL technology. Telekom Austria has already branched out into the broadband business in Bulgaria, acquiring two major Sofia-based internet service providers (Megalan and Spectrum Net) in 2011. Vivacom's acquisition would further broaden Telekom Austria's reach on that market, especially outside Sofia. Other prospective buyers for heavily-indebted Vivacom include Turkey's biggest mobile phone company Turkcell and its domestic rival Turk Telecom, owned by Dubai-based Oger Telecom, which has made two unsuccessful attempts to buy Vivacom in the past. Vivacom's debt is now estimated at about 1.65 billion euro, most of it amassed during three successive leveraged buy-outs since privatisation in 2004. It is now owned by PineBridge, the former asset management arm of US insurer AIG bought by Hong Kong billionaire Richard Li. Restructuring talks with Vivacom's senior lenders, however, make it likely that PineBridge would see none of Vivacom's selling price, while mezzanine lenders stand the risk of having their loans written off entirely.

 

EVN to restart construction of wind-power park in Bulgaria this year

EVN Bulgaria, part of Austria's energy company EVN AG, intends to restart the construction works at its wind power park near the northern Black Sea town of Kavarna this year, Capital Daily informs. At the end of 2008, EVN and the German energy company Enertrag jointly started the construction of a EUR 95mn wind-power park comprising 25 generators. The project, which planned the installation of 50MW capacity and additional 30MW, was later on frozen. The current intentions of EVN, however, envisage a smaller power park but more details have not been unveiled yet. Also, EVN, which operates as power distributor in southeast Bulgaria, informs that companies have inaugurated generators for production of green energy with total capacity of 75 MW on its territory since May 2011 when the line green energy act was adopted. The company has confirmed all the 468 contracts for linking to its network energy units with total of 378 MW capacity. However, EVN comments that many of the companies have failed to secure financing and some of the projects will not be accomplished. 

 

Energo-Pro Buys Power Distribution Company from E.oN

Czech company Energo-Pro can now officially buy from E.oN the power distribution company covering north-eastern Bulgaria after the Commission for the Protection of Competition (CPC) approved the deal. Energo-pro and E.oN agreed on the deal last month but they had to wait for the decision of the CPC. Experts from CPC have ascertained that the acquisition of the power distribution company for north-eastern Bulgaria by Energo-Pro will not have a negative effect on the competition and that the deal will not strengthen the market share of Energo-Pro bearing in mind that the company owns 8 hydropower plants in Bulgaria selling the electricity abroad.

 

 

Sofia airport passenger traffic up 5.4% y/y in 2011

The passenger traffic at the country’s largest airport in the capital city of Sofia increased by 5.4% y/y to 3.47mn passengers in 2011, the airport informed in a note on its website. The number of passenger on domestic lines (to the Black Sea cities of Varna and Burgas) increased by 16% but accounted for just 5.8% of the overall traffic. The passengers on regular international flights were by 6% more as compared to 2010. In 2011, the regular flights comprise 50 destinations, operated by 26 air carriers, 6 of which were low-cost companies. Ten air companies operated 17 charter destinations (12 in the winter and 5 in the summer season). The airport did not unveil passenger numbers on seasonal charter flights and business flights but said that 2011 was unsuccessful for these segments. The total cargo and postal packages serviced by the airport rose by 3.7% y/y to 15,887 tons in 2011. The airport was expecting to service a total of 3.5mn passengers this year, up by 6.1% as compared to 2010. In December alone, the number of passengers rose by 3.1% y/y to 259,969 and the cargo volume went down by 6.7% y/y to 1,445 tons. 

 

New passenger car registrations in Bulgaria rise 22.3% in 2011

New passenger car registrations in Bulgaria increased by 5.3% y/y to 2,062 units in December and by 22.3% to 19,136 vehicles in 2011, the European Automobile Manufacturers’ Association said. At the same time, the number of the newly registered vehicles in all the EU 27 countries declined by 6.4% y/y to 953,108 units in December and by 1.7% y/y 13.1mn in 2011. Few months ago, the local car importers association said it will discontinue announcing vehicles sales statistics as it believes numbers are affected by cars re-exports and do not reflect correctly domestic demand. According to the association, car sales plunged by 25% to 20,085 in 2010. 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea