불가리아 주요 경제뉴스 (14 - 20 April 2012)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (14 - 20 April 2012)

 

Sections/headline briefs:

 

MACROECONOMY:

Ø  Bulgaria's economy to grow between 1.4% - 4% in 2012-2015 - MinFin

Ø  Bulgaria’s consumer inflation slows to 1.7% y/y in Mar 2012

Ø  IMF's Spring Outlook Slashes Bulgaria's Economic Growth Forecast

Ø  Bulgaria GDP May Fall by 5% in Q1, Industrial Chamber Warns

 

INVESTMENTS:

Ø  New rules stop green energy boom

Ø  Italian Firm to Invest EUR 6.5 M in Solar Park in Southern Bulgaria

Ø  150 Italian Businesses Come Together over Bulgarian Investment Opportunities

Ø  Net FDI inflows in Bulgaria drop 77.5% y/y to EUR 67.4mn in Jan-Feb 2012

 

 

COMPANIES AND INDUSTRIES:

Ø  Industrial companies in Bulgaria plan 18% rise in investment in 2012

Ø  Tobacco Production in Bulgaria to Grow by 20-40% in 2012

Ø  Bulgaria to Expand only Gas Storage Facility for EUR 200 M

Ø  Greek OTE mulls selling one of its units in Eastern Europe - report

Ø  BBB juice factory in Bulgaria's Botevgrad for sale over unpaid debts to bank

Ø  New passenger car registrations in Bulgaria up 12.5% in Q1 2012

Ø  Bulgaria's Gorubso-Madan mine resumes operation

Ø  Bulgaria Gets 14 Bids in E-govt Tender

Ø  2011 Brings Best Results for Bulgaria's Port Varna in 106 Years

Ø  Hewlett-Packard opens global delivery centre in Bulgaria

 

 

 

Articles:

 

MACROECONOMY:

Bulgaria's economy to grow between 1.4% - 4% in 2012-2015 - MinFin

The final draft of the updated convergence programme, sent to the EC, outlines the fiscal policy in the period from 2012 through 2015 and assumes gradual recovery of external environment and domestic consumption. The document envisages pursuing conservative fiscal policy with budget gap remaining below the 3% ceiling. In the period 2012-2014 the output gap will fall from 2.4% in 2012 to 0.8% in 2014 as the economy gets closer to its potential. In 2015, growth in demand will actually outpace supply by 0.2% and the economy will register a 4% growth. Investment and consumption growth will however remain below their pre-crisis level in the period through 2015. In 2012, the government expects 1.4% economic growth, driven by improved external environment in H2 and gradual recovery in domestic demand. Negative developments in net exports will hamper economic growth this year. Consumption is expected to rise by 0.7%, supported by labour market stabilisation in the second half of the year. Investments will recover, partly due to base effects but also as a result of improved utilisation of EU funds. Exports growth will moderate to 4.6% in 2015, while imports will be fuelled by recovering domestic demand. The economy is seen to grow by 2.5% in 2013. In 2011, Bulgaria registered 1.7% GDP growth. IntelliNews comment: The updated convergence programme presents a lower forecast for 2012 than the autumn's 2.9% projection incorporated in 2012 budget law. Most international institutions have already also revised downwards their GDP forecasts for Bulgaria. The EC also expects GDP growth to reach 1.4% this year (compared to 2.3% in the autumn forecast), while the IMF, the WB and the EBRD appear to be more conservative with expectations for economic growth of 1.3%, 1.2%, and also 1.2%, respectively, down from 3%, 2% and 2.3%. 

 

Bulgaria’s consumer inflation slows to 1.7% y/y in Mar 2012

Bulgaria’s consumer price inflation decelerated further to 1.7% y/y in March 2012 from 2% y/y in February, according to data of the statistics office. In monthly terms, consumer prices rose by 0.3% during the month. The prices of food, housing and utilities services, transport, and education had positive contribution to the overall index growth during the month. The annual average inflation for the 12-month period ending in March 2012 slowed to 3.5% y/y from an average of 4.2% in 2011. Consumer prices have increased by 1.4% since the beginning of the year. The EU harmonised inflation index (HICP), used as a benchmark for the euro adoption, was also at 1.7% y/y, slightly down from preliminary estimate for 2% y/y in February. In monthly terms, HICP rose by 0.1%. The government expects HICP inflation to slow down to 2.6% at the end of 2012 and to an average of 2.1% in 2012. The rising world oil prices will push up consumer prices in the country in the mid-term helped by administrative upward corrections of energy prices. on the downside, weak consumption and the still stiff labour market will compensate the above effect. 

 

IMF's Spring Outlook Slashes Bulgaria's Economic Growth Forecast

The srping World Economic Outlook of the International Monetary Fund has reduced the 2012 economic growth projection for Bulgaria by almost half. Thus, according to the April 2012 World Economic Outlook of the IMF (Country and Regional Perspectives Chapter READ HERE), the Bulgarian economy is expected to grow by only 0.8% in 2012, down from the fall 2011 World Economic Outlook 2012 projection for Bulgaria which was 1.3%. According to the new IMF reported released Tuesday, the Bulgarian GDP will register a growth of 1.5% in 2013. At the same time, however, the Fund projects higher economic growth for the Central and Eastern European countries, also known as "Emerging Europe." Thus, the emerging economies from CEE combined are expected to grow by 1.9% in 2012, and by 2.9% in 2013. The fall forecast of the IMF for Emerging Europe was only 1.1% for 2012 and 2.4% for 2013. The spring World Economic Outlook report of the IMF states that the potential for growth in Emerging Europe will be tightly linked to the developments in the core of the euro zone. The IMF expects that in 2012 most of the negative consequences of the 2011 slowdown in the euro zone will be absorbed, and trade and manufacturing will start going up both in the euro zone, and globally. According to the spring WEO of the IMF, Bulgaria's northern neighbor Romania will see a growth of 1.5% in 2012, and of 3% in 2013. Poland will be the champion inEmerging Europe with a growth of 2.6% in 2012, and 3.2% in 2013. Turkey is projected to grow by 2.3% in 2012 and by 3.2% in 2013. The IMF report predicts that Bulgaria's unemployment rate in 2012 will remain the same as in 2011 – 12.5%, and that it will decline to 12.0% in 2013.

 

Bulgaria GDP May Fall by 5% in Q1, Industrial Chamber Warns

Bulgaria's economy may shrink drastically by 5% in the first three months of the year, the country's Industrial Chamber has warned. "Given the looming decline in GDP for the first quarter of 2012, we expect thebudget deficit to be significantly higher than envisaged in the budget, putting at risk public investments and the payment of pensions," according to the business chamber. Bulgaria's Industrial Chamber point out a number of factors, drawing the economy into negative territory, including a sharp decline in domestic consumption, industrial production, investments and increasingly negative trade balance. The gloomy forecast comes shortly after a Sofia-based think-tank warned thatBulgaria's economy hovers on the brink of its second recession in three years in the wake of the slump in the euro zone. Bulgaria's economy is expected to shrink in the first quarter of 2012, to be followed by a few more quarters of falling output, entering a technical, recession, the Institute for Market Economics (IME) forecast at the beginning of this week. This would be the second recession in Bulgaria in just three years. Tumbling levels of exports and industrial production show that Bulgaria's economy is already feeling the chill from the euro zone, according to the experts. 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. "It is high time that the Bulgarian government presented updated forecasts for the economy's growth this year and start taking measures to adapt the state budget to the all so realistic recession scenario," Dessislava Nikolova from IME wrote. Economists say the most troubling indicator is that in the period January -February2012, the total value of the exported goods reached almost BGN 5.7 B, down by 6.1% on an annual basis. Bulgarian exports to third countries also decreased, marking a 2.6%  fall compared to the corresponding period of the previous year and amounted to BGN 2.3 B. Exports, which used to be the driver behind Bulgaria's recovery, are slumping and in the best possible scenario can record a negligible growth or remain flattish, according to analysts' forecasts. A mix of global slow-down, restricted financing and withdrawing investors have brought Bulgaria's construction sector to a stalemate and according to the analysts it has been sliding ever more firmly into negative territory for the fourth year in a row with little hope for revival in the short term. Bulgaria's retail market continues to be on a downward trend, despite the retail concentration within malls, which have taken the role of new urban shopping, and leisure centers over the last couple of years. Data on the visits of foreign tourists in February did not bring the expected joy either. The number of foreign travelers here was down by about 3% on an annual basis after a year and a half of healthy growth. The figures dampened the sector's hopes that the excellent conditions for skiing in February will attract many foreign tourists. Earlier this month Bulgarian analysts and institutions unanimously cut their growthforecast for 2012 to just below 1.5% instead of the previously forecast 2-3%, citing slumping exports and stagnant domestic demand. 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. 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. The European Union newcomer entered recession for the first time in the first quarter of 2009 with its economy shrinking 5% from January to March 2009 and contracting 1.6% in the fourth quarter 2008 on a quarterly basis. In the first quarter of 2009 Bulgaria's GDP marked a 3,5%  drop on an annual basis for the first time since the financial and economic crisis in 1997 and the slump was much sharper than macroeconomists' forecasts.

 

 

INVESTMENTS:

 

New rules stop green energy boom

Investors in renewable energy will have to reconsider their business plans after the amendments to the Law on Energy from Renewable Sources entered into force, changing drastically the rules for adding green capacities to the electricity distribution network and obscuring deadlines for that, Capital Daily informs. In fact the changes will significantly slow down the development of energy from renewable sources in Bulgaria and hamper the achievement of the EU target of 20% renewable energy by 2020. The new law may postpone investors’ plans by a decade because they will have to stick to special schedules prepared according to the 10-year electricity network development plan. The schedules will have to be drawn up by the three electricity distribution companies in Bulgaria: CEZ, E.ON and EVN, as well as by the Electricity System Operator by 10 July, 2012.

 

Italian Firm to Invest EUR 6.5 M in Solar Park in Southern Bulgaria

Italy's Urmet Group will invest EUR 6.5 M in the first major solar park near the southern Bulgarian village of Shishmantsi, Plovdiv municipality. The facility will have a capacity of 3 MW, according to reports of private TV channel TV7. Bulgaria is currently required by the EU to guarantee a 12% share of electricity produced from renewable energy sources and the target grows to 20% by 2020. The solar park occupies a territory of 57 decares on the site of a former steel mill near Shishmantsi. The installation of the solar panels continues and the units are to start functioning in less than a month. The solar park will generate electricity in the next 20 years and the panels will function even in wintertime. The company will donate six solar panel installations to Plovdiv-based schools and kindergartens, thereby enabling them to use free electricity. At present, 70 people are working on the construction site. The foreign investor also plans to open two factories in Bulgaria, thereby creating another 1000 jobs.

150 Italian Businesses Come Together over Bulgarian Investment Opportunities

A total of 150 companies, members of Confindustria Bulgaria, the association of Italian businesses in the country, have come together for a round table on Bulgarian investment opportunities. "In recent years many Italian companies have looked to Bulgaria because of the major infrastructural projects the government has set for this country," statedConfindustria Bulgaria's Chairman, Pietro Luigi Ghia, at the forum in Sofia Thursday. "We have shown in recent years through our skills and successful collaboration with local partners that Italy knows what it means to build a country, and, mostly, knows how to do well economically. We ask the Bulgarian institutions to have confidence and to listen to us," Ghia added addressing the authorities, companies and experts present at the round table entitled "Building the Change. Bulgaria: Infrastructureand Projects for a Growing Country". About 150 among Italian enterprises as well as Bulgarian partners and respective authorities got to exchange views, ideas, and specific know-how on the actual and future modernizing infrastructural projects that will cross Bulgaria's territory. The Ambassador of Italy to the Republic of Bulgaria, Stefano Benazzo, opened the event reminding that the relations between Italy and Bulgaria have never been so positive. "In spite of the global economic crisis trade between Bulgaria and Italy has grown strongly leading to new opportunities for Italian investments," His Excellency said. Bulgarian  Deputy Minister of Regional Development and Public works, Nikolina Nikolova, took part in the forum speaking on the infrastructure  priorities of Bulgaria, in a panel with prominent business authorities such as  Levon Hampartzoumian, CEO and Chairman of MB of Unicredit Bulbank and Deputy Chairman of CEIBG. Backing the Unicredit recent report  on the announced investment projects, the CEO has highlighted a general positive trend for the beginning of 2012, adding also that "Unicredit has and will always support its clients, providing financing for infrastructural projects in spite of some trends about demonizing the banking sector." Among the Italian participants, Antonio Cancian, Member of the European Parliament and  of the Commission on Transport and Tourism , and  Carlo Ferretti, Chairman of  the SME group in Ance,  the National Association of private construction contractors, widely discussed with the Bulgarian authorities the  results reached by the Italian small and medium enterprises, up to the 65% of the Italian business presence in Bulgaria, emphasizing the crucial role played by EU funding programs in the realization of the investment projects. This broad introduction led then to the three panels of the round table, all the way from road, railways, and airport infrastructure, to the development of the Danube area - for which Nikolova underlined the strategic importance of Pan-European Transport Corridor No. 8 - to finally  focus on the clean waste management. All the firms that attended the meeting are members of Confindustria Bulgaria. The association can count on 250 associates active in textile, electronics, agriculture, finance, renewable energies, infrastructure, services, and footwear production.

 

Net FDI inflows in Bulgaria drop 77.5% y/y to EUR 67.4mn in Jan-Feb 2012

Net FDI flows were positive at EUR 67.4mn in Jan-Feb but dropped by 77.5% as compared to a year earlier, according to preliminary data of the central bank. Equity capital invested in the country’s non-banking sector by foreigners dropped by 23.9% y/y to EUR 86.5mn. However, the equity capital invested in real estate properties is still on the rise – it nearly doubled to EUR 32.7mn from EUR 16.9mn in Jan-Feb 2011 or 38.6% of the overall FDI inflows to the country, although still much lower compared to the pre-crisis level. Reinvested earnings rose by 7.4% y/y to EUR 17.8mn. The other capital account, which shows net change in intra-company loans, showed outflows of EUR 19.8mn in Jan-Feb, implying a reduction of net foreign liabilities of local companies to foreign parents. The account of other capital was positive at EUR 203mn a year earlier. In February alone, net FDI flows were positive at EUR 19.5mn in February but plunged 84.5% as compared to a year earlier, according to preliminary data of the central bank. Net FDI was also lower compared to a month ago when the figure stood at revised EUR 47.9mn. 

 

COMPANIES AND INDUSTRIES:

 

Industrial companies in Bulgaria plan 18% rise in investment in 2012

Industrial sector companies plan increased investment activity in 2012, according to the latest business inquiry of the statistics office. When compared to 2011, total investment in the sector is seen to grow by 17.5%. Most of this expenditure surge will be fuelled by state-owned industrial firms where investments will boom 63.5%. The private sector remains on the cautious side, with a 8.7% planned increase of investment. Sector breakdown shows that the companies in the utility sector expect a 39% rise in investment in 2012 and a have a leading position in terms of projected investment volume. Less optimistic are the companies, which produce non-durable goods, with a 13.5% share in total investment volume and negative expectations for investment growth. IntelliNews comment: The results of the inquiry that was carried out in the second half of Mar 2012 are in line with the latest industrial sector statistics, showing declining industrial output. Falling foreign demand and still weak domestic sector will continue to hamper industry output growth. The industrial production index has been falling since Dec for three consecutive months now and the 4% y/y decline in Feb steepened from 1.1% y/y in Jan. 

 

Tobacco Production in Bulgaria to Grow by 20-40% in 2012

Tobacco production in Bulgaria is expected to grow by 20-40% in 2012, according to Tsvetan Filev, Chair of the National Association of Tobacco Producers (NATP). In a Friday interview for Darik Radio-Shumen, he explained that the increase had been made possible by a set of amendments to the Tobacco and Tobacco Products Act aimed at achieving a liberalization of the market and the removal of the licensing regime, as a result of which prices had risen by 40-50% in 2011. Filev noted that the NATP had already opened its first regional office in the northeastern town of Dulovo and was about to open two other units in the southern cities of Kardzhali and Gotse Delchev. Filev said that the referential period in which tobacco growers received money would be extended by another year. To mark the occasion, the Association organizes an information meeting with tobacco growers from the Burley sort Friday evening in the village of Iskra, Silistra municipality. In end-March, the NATP Chair announced that a long-term strategy for the development of tobacco production in Bulgaria was being drafted. He clarified that the document would apply for the programming period 2014-2020 and would be in line with the EU Common Agricultural Policy. Filev said that the strategy would be ready in three months' time.

Bulgaria to Expand only Gas Storage Facility for EUR 200 M

Bulgaria's only natural gas storage facility in Chiren will be expanded to reach its maximum capacity, announced Kiril Temelkov, head of the state-owned companyBulgartransgaz. Thus, the Chiren storage site will reach its maximum capacity of 1 billion cubic meters of natural gas, said Temelkov. Bulgartransgaz, a subsidiary of the state monopoly Bulgargaz, is the owner and manager of the Chiren gas facility. Temelkov did reveal, however, that the expansion of the Chiren site – which should be completed by 2015, will cost the company about EUR 200 M. "The funding will be raised through loans, and from the company's business activities," he stated, while explaining that the Chiren facility will be expanded only slightly in 2013, with the expansion proceeding in several stages. "We are presently analyzing the structure of the gas storage site. We will then analyze the development of the projects for gas interconnections with neighboring countries, which will affect the storage expansion," Temelkov said, as cited by BGNES. He revealed that at present, the Chiren facility has a total capacity of 450 million cubic meters of natural gas, of which 150 million cubic meters are occupied. Bulgartransgaz is yet to hold tenders for the suppliers wishing to provide thenatural gas to fill up the storage facility. The company CEO did complain, however, that the moratorium imposed by the Bulgarian Parliament on the hydrofracking technology used for shale gas exploration and extraction actually hinders the operation of the Chiren natural gas facility.

 

Greek OTE mulls selling one of its units in Eastern Europe - report

Greek telecom group OTE (Hellenic Telecommunications Organization) mulls selling one of its units in Albania, Bulgaria or Romania to fund debt, Standart Newsreported, citing unofficial information released by Greek newspaper Naftemporiki. In Bulgaria, OTE holds the full stake in the country's second-largest wireless telecom operator GloBul through its cell-phone arm Cosmote. OTE needs to raise between EUR 500mn - 700mn to service debt, according to the report. GloBul posted a 2.6% y/y drop in revenues to EUR 412.5m in 2011. EBITDA decreased by 9.3% y/y to EUR 156.2mn and the customer base in Bulgaria reached some 4.26mn, up by 8.8% y/y. 

 

BBB juice factory in Bulgaria's Botevgrad for sale over unpaid debts to bank

Properties of Bulgaria’s BBB juice manufacturing company are being offered for sale because of outstanding debts to MKB Unionbank, according to the register of private enforcement agents. There is also an ownership dispute between current shareholders and NBG investment fund, being reviewed by international arbitrators. Property owned by BBB in the village of Trudovets in the Botevgrad area is on sale for a starting price of 2.36 million leva, Capital Daily said. Bids are open until May 17 2012.

 

New passenger car registrations in Bulgaria up 12.5% in Q1 2012

New passenger car registrations in Bulgaria increased by 12.5% y/y to 4,452 units in Q1, 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 7.7% y/y to 3,312,657 units in Jan-Mar. In March alone, new passenger car registrations in Bulgaria dropped by 6.6% y/y to 1,483, compared to a 7.7% annual decrease in EU-27. The market fell by 22.3% to 19,136 sold vehicles in 2011. Last year, 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. 

 

Bulgaria's Gorubso-Madan mine resumes operation

Gorubso-Madan mine has resumed operation, Monitor daily reported. The mine halted production for a period of 45 days due to workers' protests over unpaid salaries. The resolution of the problem was helped by the finalised sale of Gorubso-Madan mining concession in early April. The new owner is Varba Batanci, a joint venture between MINSTROY Holding and nonferrous metals producer KCM 2000. Gorubso-Madan was previously run by Intertrust Holding of Valentin Zahariev, who is also the owner of lead and zinc smelter OTsK - Kardjali. The new owner, MINSTROY, is owned by the vice president of one of the largest business groups in Bulgaria in the 1990s. Gorubso-Madan employes 980 workers. 

 

 

Bulgaria Gets 14 Bids in E-govt Tender

Bulgarias transport, IT and communications ministry said on Wednesday that 14 firms and consortia have filed bids in a tender for the procurement of services aimed at expanding the reach of e-government. The project is worth 12 million levs ($8.0 million/6.1 million euro) and its financed by EU-funded operational program Administrative Capacity and the European Social Fund, the ministry said in a statement. The tender is divided into eight lots. one of the purposes of the project is the creation of a register for e-identity. The bidders include Infrasoft International PLC, Comsoft Ltd, Atos IT Solutions and Services Ltd, Sirma Solutions Ltd, Stemo Ltd etc.

 

2011 Brings Best Results for Bulgaria's Port Varna in 106 Years

In 2011, Bulgaria's largest seaport – Port Varna – achieved the best results in its 106-year history of commercial shipping, its CEO Capt. Danail Papazov has announced. Thus, in 2011, Port Varna, consisting of two complexes – Port Varna-East in the city of Varna and Port Varna-West near the town of Devnya some 22 km inland – processed a total of 9.15 million metric tons of cargo, goods, and raw materials – a record amount in its history far surpassing even the more than 7 million metric tons processed in 2007, the best pre-crisis year for the then booming Bulgarian economy. Port Varna's financial results for 2011 are also very good, and it is the only Bulgarian port that has managed to fulfill all of its infrastructure maintenance programs, Papazov emphasized. The Port Varna company completed 2011 with a net profit of BGN 4 M after taxes, or a profitability rate of some 7-10%, he explained. In his words, in 2011, Port Varna processed the largest share of Bulgaria's grainexports, or about 2.4 million metric tons. Papazov noted that Bulgaria's largest Black Sea port is export-oriented with the industrial complexes near Devnya providing the bulk of the exported goods and materials including fertilizers, and various construction materials. A total of 580 different types of goods were exported through Port Varna in 2011. "We process virtually all kinds of cargo. Since 2008, Port Varna's processed freightamount has been growing by 15% annually," the port CEO stressed.

 

 

 

Hewlett-Packard opens global delivery centre in Bulgaria

Hewlett-Packard (HP) opened yesterday (April 19) a global delivery centre in Bulgaria creating 150 new jobs, BTA reported. The centre will monitor and manage critical technological processes across the world. Following the start of the new operation, HP will employ totally 4,000 people in the country. President Rosen Plevneliev, who attended the opening, said that Bulgaria can be a regional leader and global player on the IT stage as currently some 25,000 people in Bulgaria work at such centres for long-distance services, mainly in the sphere of IT. The sector has been developing successfully in the country and should receive the support of the state with a policy targeted at the establishment of clusters. 

 

 

 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea