불가리아 주요 경제 뉴스 (20 - 27 January 2012)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (20 - 27 January 2012)

 

Sections/headline briefs:

 

 

MACROECONOMY:

Bulgaria’s foreign debt drops 3% y/y to EUR 35.5bn at end-Nov 2011

EBRD Lowers Bulgaria's Economic Growth Forecast for 2012

Housing prices in Bulgaria drop 6.2% y/y in Q4 2011

Bulgarian Economy to Grow 2.5-3% in 2012 – FinMin

Bulgaria Resumes Export of Electric Power after Midnight

Bulgaria's Parliament Greenlights Joining EU Fiscal Pact

 

 

INVESTMENTS:

Oil refinery Lukoil Neftochim invests USD 1.5bn in heavy waste processing

 

 

COMPANIES AND INDUSTRIES:

Yazaki to Start Automotive Cable Operation in Sliven

Gazprom Allowed to Acquire Another 7 Filling Stations in Bulgaria

ABB Factory in Bulgaria Extends Production Competence

NIS Petrol gets approval to acquire 7 petrol stations in Bulgaria

Sales of Bulgaria's battery producer Monbat rise 12.9% in 2011

Bulgaria's food retail market to increase by 6-7% annually until 2016

 

 

 

 

 

Articles:

 

MACROECONOMY:

 

Bulgaria’s foreign debt drops 3% y/y to EUR 35.5bn at end-Nov 2011

The gross external debt declined by 3% y/y and 0.7% in a month to EUR 35.5bn as of end-November, according to preliminary data of the central bank. The foreign liabilities of both the public and the private sectors fell at the same rate like the total. The reduction of the private sector debt was a result of the banking sector activity (contraction of the short-term deposits of foreigners). The total foreign debt accounted for 90.7% of the full-year GDP estimate as compared to 101.6% of GDP at the end of Nov 2010. The short-term debt, covering liabilities with original maturity of one and less than one year, went down to 28.7% of the total, as compared to 29.3% at the end of October and 30.4% a year earlier. The credits on demand accounted for 24.8% of the total external debt (up from 24.6% at end-Oct but down from 25.3% in annual comparison). Some 62.3% of them were reported as inter-company loans. The share of total inter-company loans, which are not included in the short-term debt statistics, accounted for 41.4% of the total external debt, up by 0.3pps in a month and 0.7pps in annual comparison. The ratio of foreign reserves to short-term debt improved further to 129.3% at the end of November as compared to revised 125.6% a month earlier and 113.8% at the end of November 2010. It has exceeded its level in the past four years but is still weaker compared to about 300% in 2002-2004. 

 

EBRD Lowers Bulgaria's Economic Growth Forecast for 2012

The European Bank for Reconstruction and Development has decreased its October forecast for Bulgaria's economic growth in 2012 by 1.1% to reach 1.2%. The only Southeast European country that has seen a larger decrease in the Bank's latest Regional Economic Prospects report is Bosnia, whose forecast has been dropped by 1.8%. The expected decrease in Bulgaria's exports, as well as the ongoing debt crisis in neighboring Greece are expected to be the key factors to have a negative impact on the Balkan country's economic growth throughout the year. Measures to reduce the fiscal deficit will continue to be implemented and the government is committed to the currency board and entry in due course into the ERM-II mechanism, the report reckons. The main risk the country faces is that its close links to Greece could lead to negative spill-over effects in terms of trade, investment and the financial sector. It has been pointed out in the report that Bulgaria was the only country in the CEB and SEE regions positive bankrelated cross-border capital inflows in the fall, even though they followed earlier outflows. The EBRD has reduced its economic growth forecasts for 2012 for central and south eastern Europe, as well as eastern Europe and the Caucasus, and warned that a further deterioration of conditions in the eurozone could have a substantial further impact on the whole of the EBRD region. The Bank's latest Regional Economic Prospects report also calls for a coordinated response from all parties to limit the impact of the eurozone crisis on eastern Europe. The report sees a significant overall slowdown in growth across the EBRD's 29 countries of operations from central and south Europe to central Asia – to an average 3.1 per cent in 2012 from 4.8 per cent in 2011. Although this outlook is based on no further deterioration in the eurozone crisis, the report refers to "substantial risks" to the baseline scenario. It says a worsening of the eurozone turmoil would pose a systemic challenge to emerging Europe because of the deep integration of its banking sector with eurozone-based banks, particularly if compounded by the re-emergence of uncoordinated national policies, with negative cross-border spillovers. The EBRDregion would also be negatively affected by a resulting slowdown in the U.S. and elsewhere and from linked declines in commodity prices. The forecast for 3.1 per cent growth across the whole EBRD region is roughly in line with predictions made last October, but the new report underscores a growing divide among the 29 countries surveyed.

 

Housing prices in Bulgaria drop 6.2% y/y in Q4 2011

The average housing prices fell by 6.2% y/y to BGN 887.6 (EUR 453.8) per square metre in Q4 2011, data of the statistical office shows. The decline expanded marginally from 6.1% y/y as compared to a quarter earlier. Data refers to existing apartments sold in district towns and excludes newly-built and luxury apartments. The price level declined by 1.5% during the quarter as compared to 0.8% q/q in Q3 2011. Prices increased in quarterly terms in eight of the 28 regional centres in the country, the same number as in the previous quarter. The prices in the Northern Black Sea city of Varna were the highest (BGN 1,455, down 2.6% q/q) in Q4, followed close by those in the capital city of Sofia (BGN 1,453, down 0.2% q/q), the southern Black Sea city of Burgas (BGN 1,166, down 1.5% q/q) and the country’s second largest city of Plovdiv (BGN 948, down 2.9% q/q). In 2011, home prices fell by 6.1% to an average of BGN 905.4. The decline sustained for a third year in a row but narrowed from 10.1% in 2010 and 21.4% in 2009. Home prices have been growing by double-digit rate in the period 2003-2008 and the expansion peaked at 47.5% in 2004. 

 

Bulgarian Economy to Grow 2.5-3% in 2012 – FinMin

Bulgaria's economy is likely to grow between 2.5% and 3.0% in 2012, according to Bulgarian Finance Minister Simeon Djankov. A government growth forecast of 2,8% for this year had looked optimistic until the last few weeks, but it now looked more achievable given signs of an upturn in both exports and domestic demand, Djankov said Friday in an interview for Reuters cited by the press service of the Bulgarian Finance Minitry. "In the last month, month and a half finance ministers - generally pessimists - are starting to be a bit more optimistic," Djankov said. "There are signs in the last few weeks of Europe doing better than the very pessimistic forecasts that were coming out," he said. "This is also the case for Bulgaria." Bulgaria is still recovering from a deep recession but probably grew 2.2-2.3% last year, according to Djankov, and by maintaining a tight fiscal policy it has not had to bring in severe austerity measures like its neighbors Greece and Romania.  Analysts are however still cautious. They see the economy expanding by 1,2-1,5% this year. Djankov said the government should be able to beat its budget deficit target of 1.3 percent of gross domestic product this year, which was important to avoid pressure on its currency peg to the euro.  "This year's forecast is 1,3 percent and I think we can do better than that," he said. Djankov has also told Reuters that Bulgaria's center-right government will push ahead with privatising state assets this year and plans to issue a Eurobond worth up to EUR 1 B in the second quarter. He said the government aimed to sell a stake of between 10 to 25% in state energy company BEH (Bulgarian Energy Holdring) via a foreign stock exchange by the end of the year, which could raise "several hundred million euros".

 

Bulgaria Resumes Export of Electric Power after Midnight

Bulgaria resumes exporting electric power at 1 am Saturday, January 28, orderedEconomy and Energy Minister, Traichko Traikov. The resumed export has been made possible by the end of the effective strike of miners and workers at the largest State-owned coal mines "Maritsa Iztok." The mandatory threshold of 75% of coal reserves has been reached, the Ministry informs. The export of electric power was stopped on January 21 over the strike in order to avoid power outages in the country. Bulgaria will not be sanctioned for halting the export because the strike is considered a force-majeure circumstance. The losses from the strike are estimated at BGN 20 M.

 

Bulgaria's Parliament Greenlights Joining EU Fiscal Pact

Bulgaria's parliament approved on Friday the draft decision for joining the Treaty on Stability, Coordination and Governance in the Economic and Monetary Union or the so-called EU Fiscal Pact. The treaty was supported by 129 MPs, 1 voted against, while 48 abstained. Foreign Affairs Minister, Nikolay Nladenov, informed the MPs that the country has set six conditions for the joining, such as no tax harmonization in the EU. The Eurozone pact aims at establishing more rigid fiscal discipline and stronger coordination of economic policy. on Wednesday, MPs from three Parliamentary Committees – on Foreign Policy, on European Affairs, and on Budget, at a joint meeting, passed the proposal with which the Parliament gives the cabinet green light to take part in negotiations for the Pact. The decision states that in joining the Pact, Bulgaria should not assume fiscal responsibilities and will not coordinate its economic policy with the one of the countries in the Eurozone; will not harmonize taxes with the Eurozone, and will have a status of observer at meetings of Eurozone members. Another condition is for the rules to be valid for the entire EU, without exceptions and parallel structures. The decision also states that Bulgaria will fully endorse the Treaty after joining the Eurozone. Meanwhile, economy experts have said that Bulgaria's joining of the Treaty is a must, but it remains unclear how the new fiscal discipline rules will be controlled – they ask for the establishment of an independent body to execute this control.

 

 

INVESTMENTS:

Oil refinery Lukoil Neftochim invests USD 1.5bn in heavy waste processing

Local refinery Lukoil Neftochim, located in the southern Black Sea city of Burgas, will invest some USD 1.5bn in a complex for heavy waste processing, investor.bg informs. The contract, which has been awarded to Italy’s Technip, was signed yesterday (January 25, 2011). The complex will be the largest catalytic hydrocracking plant in Eastern Europe. The first stage of the project should be completed in 2016 and the second stage - by 2018. The project will raise the productivity and the efficiency of the refinery and will place it among the most competitive in the world. Also, the carbon dioxide emissions will be minimised. Some 3,000 jobs will be opened during the construction works. Lukoil Neftochim, part of Russian oil company Lukoil, is the largest refining and chemical processing plant on the Balkans. It employs some 2,200 workers. The company exports half of its production to neighbouring Balkan countries and reportedly covers 80% of the domestic motor fuel demand. 

 

 

COMPANIES AND INDUSTRIES:

 

Yazaki to Start Automotive Cable Operation in Sliven

Tokyo-based automotive company Yazaki will open an operation in Sliven by the end of June 2012, Sliven Mayor Kolyo Milev told a news conference on Monday. At first, it will employ 350 workers to make Ford Transit cable sets. The plant will be located on the grounds of a former textile dyeing factory. Most of the workers will probably be recruited from among commuters from Sliven employed in another Yazaki plant which has been operating in the nearby town of Yambol for a few years now. The staff will be increased to 500 by the end of 2012, and will then at least double in 2013. The Mayor has been assured that Yazaki's joint venture with Ford Transit will last until 2018 or perhaps even 2020. The plant in Sliven will produce 4,000 cable sets monthly.

 

 

Gazprom Allowed to Acquire Another 7 Filling Stations in Bulgaria

The Commission on Protection of Competition (CPC) has cleared theacquisition of seven filling stations by NIS Petrol EOOD, a company owned by Russian energy giant Gazprom. The sites are located in Smolyan, Kardzhali, Asenovgrad, Blagoevgrad, and the villages of Ledenik and Pavolche. one month ago, the anti-trust watchdog allowed NIS Petrol EOOD to acquire another seven sites. According to CPC's statement, the company is a new player on the fuel retail market in Bulgaria and is unlikely to develop a dominant position that could distort competition, given the small market share it occupies. To prove the point, CPC mentions the presence of several major chains of filling stations which enjoy a loyal customer base and a good reputation and are competing effectively among themselves. The anti-trust watchdog further adds that none of the players on the market has voiced concerns about a negative impact of the transaction on the competitive environment in the sector.

 

ABB Factory in Bulgaria Extends Production Competence

The ABB factory in Bulgaria's Sevlievo has assembled and delivered its first Metal Enclosed Capacitor Banks (MECB) products to European customers, ABB Bulgaria announced Monday. The delivery was carried out at the very end of 2011, with the beneficiary being the Solvey Sodi company, a significant chemical plant in Bulgaria. The assembly unit has been set up in Bulgaria's Sevlievo, with the support of ABB's Technical Lead Center for MECBs in Australia, aiming at shortening the lead time for European orders. MECBs are available in a range of models up to 12 kV. „ABB is the world's leading capacitor manufacturer. This competence has lead to a fully integrated solution for reactive compensation. The MECB combines primary components and secondary control and protection within a compact modular enclosure. The equipment is suitable for both electrical distribution utilities and large industrial power users, including mining, paper, chemical, petrochemical, wind farms, plastic and heavy industry. It allows customers to reduce electricity charges and energy losses, increase network capacity and reduce voltage drop as well as the effect of starting large machines," ABB Bulgaria explained. MECB represents the second addition to the Sevlievo factory's portfolio in 2011, the first one being the Local Control Cabinets (LCC) assembly for GIS up to 170 kV. The first LCC dispatch was made in October 2011. "The introduction of both (high voltage) products was done in the context of operating the ABB Avangard factory in Sevlievo as the High Voltage Products European assembly hub for these products. In addition, the scope of this project also included the introduction of a SAP ERP (Enterprise Resource Planning) system," the company explained. The plant in the town of Sevlievo in Central Bulgaria has been part of the ABBGroup since 1996. The factory is specialized in MV (Medium Voltage) and HV (High Voltage) disconnectors in the range of 12 – 550kV, for which it providesengineering, assembly, site installation, warranty and after-warranty services, as well as spare parts. "We are happy and proud with this new competence of our factory. ABB Avangard is a plant with a long tradition in Bulgaria, which has proven over the years a good performance and a high quality of its products. Over the past 15 years, the factory's products have been exported to more than 30 countries." – said Peter Simon – Country manager of ABB in Romania, Bulgaria and Moldova. ABB operates in Bulgaria through three companies in six locations, the main focus being on production. The three ABB production units, situated in Petrich, Sevlievoand Rakovski deliver key products and components, acting either as key suppliers to other ABB factories within the ABB Group, or delivering ABB products to end customers. The Swiss-based engineering ABB Group of companies operates in around 100 countries and employs about 130,000 people.

 

 

NIS Petrol gets approval to acquire 7 petrol stations in Bulgaria

Bulgaria's state antitrust commission has allowed NIS Petrol, the local arm of Serbia’s Naftna Industrija Srbije, to acquire seven petrol stations in the country, owned by six different companies, the regulator informed on its website. The watchdog explains that the concentration will affect the local car fuels retail market but comments that NIS Petrol will hold insignificant market share and is highly unlikely to acquire dominant position in the future. We remind that a month ago, the regulator allowed NIS Petrol to take over another seven petrol stations. Naftna Industrija Srbije is a subsidiary of Gazprom Neft, part of Russia’s gas major Gazprom. Gazprom Neft has earlier said that it targets 5-8% of the local fuel retail market. 

 

Sales of Bulgaria's battery producer Monbat rise 12.9% in 2011

The net consolidated sales of Bulgaria’s largest car battery producer Monbat increased by 12.9% y/y to BGN 213.2mn (EUR 109mn) in 2011 decelerating from 16.7% y/y in Jan-Nov 2011, according to information posted on the website of the local stock exchange. In December alone, sales went down by 16% y/y to BGN 18.5mn. The pre-tax profit of the company rose by 6.7% y/y to BGN 21.3mn in 2011 but fell by 13.7% y/y to BGN 1mn in December only. Monbat projected net sales in the amount of BGN 176.3mn, net profit of BGN 21.7mn and EBITDA of BGN 34mn in 2011. The consolidated results comprise those of Monbat and its unit Monbat Recycling. In April 2010, Monbat decided to spin off its recycling operations in order to improve its efficiency and make its activities more attractive to potential foreign investors. 

 

Bulgaria's food retail market to increase by 6-7% annually until 2016

The number of modern food retailers ((hypermarkets, supermarkets, corner shops, convenient stores, discounters, Cash & Carry, drugstores) has reached some 1,900 in 2011, which is a fourfold increase as compared to 2005, Milos Ryba, senior analyst at the world’s leading retail analyst firm Planet Retail said in an interview for Capital Daily. The number will continue increasing by 6-7% annually in the next five years to reach 2,600 in 2016. Milos Ryba expects further consolidation of the retail food market in the country by organic expansion of foreign retailers like Schwarz Group (Kaufland and Lidl), Rewe Group (Billa and Penny market) and Delhaize Group (Piccadilly). Ryba projects leading role of discounters and low-priced traders. The first five food retail chains in Bulgaria cover 20% of the food market as compared to 50% in Croatia, almost 80% in Slovenia. Modern food trading accounts for some 35% of the total food market in the country. 

 

 

 

 

 

 

 

 

 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea