불가리아 주요 경제뉴스 (6 - 14 April 2012)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (6 - 14 April 2012)

 

Sections/headline briefs:

 

MACROECONOMY:

·         Bulgaria’s industrial production falls 4% y/y Feb 2012

·         Bulgaria's retails sales up 2.4% y/y in Feb

·         Bulgaria 2012 Growth Forecast Unanimously Capped at 1.5%

·         EU Funds Minister: Bulgaria Has Contracted 73% of Country's EU Allocation

·         Bulgaria faces risk of renewed recession in 2012 – analysts

·         Bulgaria Registers 1.7% Inflation Y/Y in Jan 2012

 

 

INVESTMENTS:

·         Italian company invests BGN 29 million in solar park

·         Toshiba to research options for alternative power generation projects in Belene

 

 

COMPANIES AND INDUSTRIES:

·         Bulgaria's Facility Management Market Grows to 695 Mln Euro at End-March

·         Bulgaria to build new generating unit at Kozloduy nuclear power plant

·         Bulgarian Govt Confirms Trakiya Highway Launch on July 1

·         Bulgarian Electric Motor Plant Workers Threaten Civil Disobedience over Unpaid Salaries

 

 

 

 

 

Articles:

 

MACROECONOMY:

 

Bulgaria’s industrial production falls 4% y/y Feb 2012

Bulgaria’s industrial production index declined by real 4% y/y in Feb, preliminary data of the statistics office shows. The contraction sustained for a third month in a row steepening from revised 1.1% y/y in Jan 2011. The decline in the manufacturing sector accelerated to 5.2% y/y compared to 1.3% y/y in Jan. The sub-sectors that contracted the most during the month were textiles, apparel, wood material, chemical and metal products. The mining industry turned to 9.3% annual growth in Feb, reversing a 0.9% decline in Jan. This was due to the metal ore mining sub-sector, which registered the strongest growth, expanding by 43.9% y/y. The utilities sector also posted deteriorated results in Feb, as the output contracted by 4.1% y/y. The number of industry branches, which posted annual growth in Feb, was 10 out of 27, as compared to 11 in the previous month. In seasonally-adjusted terms, the industrial production fell by 2.1% m/m and 3.7% y/y in Feb. The industrial turnover index increased by 4.8% y/y as domestic turnover went up by 5.2% y/y and exports added 4.3% y/y, up from January's 4.2% growth. IntelliNews comment: The industrial output is likely to remain in negative territory in the mid-term. Falling foreign demand and still weak domestic sector will continue to hamper industry output growth. Exports turned to decline already in Jan, dropping by 10.2% y/y, following a robust 30% expansion in 2011. 

 

Bulgaria's retails sales up 2.4% y/y in Feb

Retail sales declined by real 2.4% y/y in Feb after increasing by 0.3% y/y in the previous month, according to data of the statistics office. Sales of clothes and shoes as well as household appliances and furniture dropped the most - by 24.7% and 18.9%, respectively. on the other hand, sales of pharmaceutical products and sales, online or via the phone, registered a growth of 12.4% and 17.2% y/y in Feb, respectively, making them the best performing sectors during the month. Sales of food and tobacco also registered positive growth, rising by 2.5% y/y, down from January's 3.1%. 

 

Bulgaria 2012 Growth Forecast Unanimously Capped at 1.5%

Bulgarian analysts and institutions have cut their growth forecast for 2012 to just below 1.5% instead of the previously forecast 2-3%, citing slumping exports and stagnant domestic demand. Exports to the European Union, the main driver of Bulgaria's economy, declined in the last quarter of 2011 because of the euro-area's debt crisis. Their growth in2012 has been set at just 0.1%. This has left domestic demand as the major driving factor behind the economy, but expectations are that it will remain subdued due to a rising unemployment rate and a drop in investments, suggesting a further slow-down in the country's recovery this year. "The recent developments on the labor market suggest that the unemploymentrate will rise, while it will become more and more difficult for those who have a job to keep it," Petar Chobanov from the Institute for New Economic Progress commented for Capital daily. "These prospects, coupled with the expected utility hikes, make consumers wary of spending and they rein in expenses," he added. Chobanov does not rule out a recession in Bulgaria, a scenario other more moderate analysts dismiss as far-fetched. "It is indicative that Bulgaria's economic recovery slowed in the fourth quarter of 2011 in nominal value on an annual basis. This shows potential for a further slow-down, which combined with a lack of investments, does not bode well for the economy's long-term prospects," according to Chobanov. Meanwhile the central bank BNB estimated Bulgaria's economic growth to slow-down to 0.7% in 2012, citing the sovereign-debt crisis in the euro area. "Slower economic expansion will restrict loans and banks' potential to generate profit through lending," central bank Governor Ivan Iskrov said in a speech in Sofia last week. "Curbed demand for new loans will further slow-down economic expansion, which will have a negative impact on employment rates and living standards," he added. Bulgaria's government and the European Commission recently revised downwards their forecast for the economy of the Balkan country, estimating it is to grow 1.4% this year due to worsening growth prospects in key trading partners across Europe and stagnant domestic demand. Bulgaria's economy expanded by 1.7% in 2011.

Growth slowed down to 1.6% in the fourth quarter of last year, curbed by slumpingexports, according to data of the statistics institute.

 

EU Funds Minister: Bulgaria Has Contracted 73% of Country's EU Allocation

Speaking to reporters Monday, EU Funds Minister Tomislav Donchev said that Bulgaria has contracted 11.5 billion leva under EU operational programmes, or 73 per cent of the country's EU allocation between 2007 and 2013. Donchev said this showed that projects are underway or have been completed for two-thirds of the money. "Payments stand at about 21 per cent, or 3.3 billion leva," said the Minister. Minister Donchev visited the Southwestern University of Blagoevgrad, where he gave a lecture on "Challenges before Bulgaria in the next EU programming period 2014-2020". The lecture took place within a cycle of lectures on the 20th anniversary of the university's Department of Law and History. It was attended by students, faculty, representatives of the local authorities and the judiciary. "2011 saw a large increase in contracted funding. Our plans for this year are even more ambitious: to contract 90 per cent of the EU allocation and pay out at least 3 billion leva." The Minister said that a mix should be sought between various investments in order to achieve a sustainable social and economic effect and change the lives of people.

 

Bulgaria faces risk of renewed recession in 2012 - analysts

After returning to economic growth in 2011, Bulgaria should brace for more recession in 2012 and the Cabinet should prepare contingency plans to spur growth if external risks result in the contraction of the economy, economists from the Macro Watch group said. The likelihood of negative economic growth was high because of renewed recession in the euro zone and the high chance that global energy prices will remain high throughout the year (Bulgaria imports the bulk of its energy resources). Bulgaria's Government targets economic growth of 3.6 per cent this year, but officials have privately said that the 2012 Budget only required one per cent growth to meet revenue and deficit targets. The Finance Ministry should draft contingency plans in case economic growth is lower than one per cent, Dessislava Nikolova, chief economist at Institute for Market Economy think-tank, said. With parliamentary elections scheduled for 2013, the main political risk to the Budget was that the Government may increase populist spending already this year, but it should resist such temptation, Nikolova said. According to economist Dimitar Chobanov, the Finance Ministry's revenue estimates were overly optimistic, including the expectations of high EU funds absorption, and the current Budget did not contain sufficient buffers against below-expectation growth. Another risk is the foreign debt due in mid-January 2013, which Bulgaria has to refinance this year. Given the continued risk of renewed debt crisis in the euro zone, Bulgaria could find itself dipping into the financial markets at a bad time and any attempt to predict the interest rate on the refinanced debt was a crapshoot, economist Georgi Ganev said. But while direct Government debt was relatively low at 11.7 billion leva, it should not be forgotten that state-owned companies and financial institutions, as well as municipalities, had amassed large debts as well, Open Society Institute economist Georgi Angelov said. The Cabinet should keep a permanent register of this debt, according to Angelov, who estimated it at about 10.3 billion leva.

 

Bulgaria Registers 1.7% Inflation Y/Y in Jan 2012

The consumer price index (CPI) in March 2012 compared to February 2012 was 100.3%, i.e. the monthly inflation was 0.3%. The data was reported Thursday by the Bulgarian National Statistical Institute (NSI). The inflation rate since the beginning of the year (March 2012 compared to December 2011) has been 1.4% and the annual inflation in March 2012 compared to March 2011 was 1.7%. The annual average inflation, measured by CPI, in the last 12 months (April 2011 - March 2012) compared to the previous 12 months (April 2010 - March 2011) was 3.4%. In March 2012 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 0.7%; alcoholic beverages and tobacco - the prices have remained at the level of the previous month; clothing and footwear - a decrease of 1.5%; housing (rentals, maintenance and repair), water, electricity, gas and other fuels - an increase of 0.2%; furnishings, household equipment and routine maintenance of the house - an increase of 0.1%; health - a decrease of 0.4%; transport - an increase of 1.2%; communications - a decrease of 0.3%; recreation and culture - a decrease of 0.6%; education - an increase of 0.1%; restaurants and hotels - the prices have remained at the level of the previous month; miscellaneous goods and service - an increase of 0.1%. The harmonized index of consumer prices (HICP) in March 2012 compared to February 2012 was 100.1%, i.e. the monthly inflation was 0.1%. The inflationrate since the beginning of the year (March 2012 compared to December 2011) has been 1.1% and the annual inflation in March 2012 compared to March 2011 was 1.7%. The annual average inflation, measured by HICP, in the last 12 months (April 2011 - March 2012) compared to the previous 12 months (April 2010 - March 2011) was 2.7%. In terms of HICP in March 2012 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 0.3%; alcoholic beverages and tobacco - the prices have remained at the level of the previous month; clothing and footwear - a decrease of 1.2%; 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 0.1%; health - a decrease of 0.2%; transport - an increase of 1.1%; communications - a decrease of 0.2%; recreation and culture - a decrease of 1.0%; education - an increase of 0.2%; restaurants and hotels - a decrease of 1.0%; miscellaneous goods and service - an increase of 0.1%. The price index of a small basket (PISB) in March 2012 compared to February 2012 was 100.5% and the overall increase since the beginning of the year (March 2012 compared to December 2011) has been 101.8%. In March 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 0.7%; non-food products - an increase of 0.3%; services - an increase of 0.1%. The 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.

 

 

INVESTMENTS:

 

Italian company invests BGN 29 million in solar park

New 16-MW solar park will become operational in Bulgaria in June. The project was developed by the Italian Moncada Energy Group. The installation was built by the EBT - Electra Volt trade, controlled by Moncada Energy Bulgaria. The photovoltaic project was financed with EUR 28.8-million loan from UniCredit Group viaUniCredit Bulbank Bulgaria. EUR 23.5 million is the medium-term expenses. The remaining EUR 5.3 million will be used for VAT payment that will be reimbursed in 15 years. Capital Daily informed.

 

Toshiba to research options for alternative power generation projects in Belene

During her official visit to Japan, Ms Tsetska Tsacheva, President of the National Assembly, has discussed with Japan's Toshiba opportunities for development of an alternative to the discontinued in late March project for the construction of nuclear power plant Belene, investor.bg reported. The Japanese company has confirmed it will make a research with respect to the options for development of energy production capacities on the plot. Toshiba has a vast presence on the Bulgarian energy market. Apart from having participated in the modernisation of NPP Kozloduy and TPP Maritsa Iztok, it is also investing in power generation capacities in the country. 

 

COMPANIES AND INDUSTRIES:

 

Bulgaria's Facility Management Market Grows to 695 Mln Euro at End-March

The total value of Bulgaria's facility management market amounted to 1.36 billion levs ($909 million/695 million euro) at the end of March, up by 226 million levs from the beginning of last year, Facility Optimum Bulgaria said on Tuesday. Local premises totalling 1.15 million square meters (sq m) used facility management services at the end of last month. Their combined area rose by 260,000 sq m last year, Facility Optimum Bulgaria said in a press release. The most popular facility management services are cleaning, security services and fire safety. Sofia-based Facility Optimum Bulgaria (http://foptimum.bg) provides facility management services.

 

Bulgaria to build new generating unit at Kozloduy nuclear power plant

The government made a decision to build a new generating unit at Kozloduy nuclear power plant, finance minister Simeon Dyankov said, as quoted by BTA. The new facility will be designed and built without any government guarantees or taxpayers' money, Djankov said. The government will install the 1,000 MW nuclear reactor, already produced by Russia's Rosatom, for the Belene project at the site of the operating nuclear plant in Kozloduy. At end-March, the parliament approved the decision of the government to scrap the project for construction of a 2,000 MW nuclear power plant in the Danube town of Belene, due to the high price and the lack of European strategic investor. 

 

Bulgarian Govt Confirms Trakiya Highway Launch on July 1

Bulgaria's first major highway, "Trakiya", linking Sofia to the Black Sea coast atBurgas is to be launched on July 1, 2012, Regional Development MinisterLilyana Pavlova has confirmed. Speaking on Friday after inspecting the construction of the last two unfinished sections of the new road, Pavlova reiterated her last week's announcement that the highway will be completed ahead of schedule. In her words, the builders of the 360-km highway has committed to completing it ahead of schedule. About two-thirds of the Trakiya Highway have already been completed, with the full completion being projected for the late summer/fall of 2012. When completed, it will be the first major highway in Bulgaria, not counting the 19-km Lyulin Highway completed last year. Another important road project for which the government is starting tenders is the four-lane road between Burgas and the largest Bulgarian Black Sea resort Sunny Beach.

 

Bulgarian Electric Motor Plant Workers Threaten Civil Disobedience over Unpaid Salaries

Workers from the Elma AD electric motor plant in the central Bulgarian city of Troyanare gearing up for civil disobedience due to unpaid salaries since 2008. An initiative committee of former workers represented by Georgi Gachevski has sent a protest note to Prime Minister Boyko Borisov, Labor Minister Totyu Mladenov, Economy and Energy Minister Delyan Dobrev and Chief Prosecutor Boris Velchev, according to reports of the Bulgarian Telegraph Agency (BTA). The note says that systematic delays in payments and partial payments started in 2002, while in 2008 the payment of salaries stopped altogether. The workers received compensations from the the local Labor Office Directorate until mid-2010 but the situation of over 400 employees and their families has deteriorated to a critical level, according to the note. Most of the unpaid sums amount to several thousand leva. Over 150 employees of the plant have already won their cases in court and are waiting for the owner of the plant, Nikolay Banev, to pay them. Elma AD Troyan is a legal successor of the former Elprom-Troyan plant, the biggest manufacturer of middle power electric motors on the Balkan Peninsula, which exported 85% of its output to over 40 countries. Apart from Elma AD, six other major industrial companies owned by Banev are in a similar condition. The workers of the Troyan-based plant threaten civil disobedience unless they get paid.

 

 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea