불가리아 주요 경제 뉴스 (4 - 11 May 2012)

 

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (4 - 11 May 2012)

 

Sections/headline briefs:

 

MACROECONOMY:

       Retail sales in Bulgaria rise 3.9m/m in March 2012 – Eurostat

       Bulgarian Economy May Recover Soon – Banker

       Bulgaria's retails sales down 1.4% y/y in March

       Bulgaria's industrial output down 3% y/y in March

       Bulgaria's Exports to EU Down by 8.1% in Jan-Feb 2012

       IMF Forecasts 0.8% GDP Growth in Bulgaria

       Bulgaria's exports growth recovers in Mar, trade gap widens

 

INVESTMENTS:

       Over EUR 100mn Qatari capital expected to flow to Bulgaria

       China Will Invest 1.5 Billion Dollars In Bulgarian Energy Projects

       Bulgaria Invites Israeli Companies to Invest in Infrastructure

       Bulgaria's 2011 FDI to Reach EUR 1.6 B - Agency Chief

 

COMPANIES AND INDUSTRIES:

       Construction Sector Registers Growth in March

       Bulgaria puts Technoexportstroy for sale, lowers price to EUR 30.7mn

       Bulgaria's M&A Market to See Smaller Number of Deals in 2012 – Report

       Bulgarian drugmaker Sopharma opens subsidiary in Ukraine

       5 MW Solar Plant Unveiled at Northwestern Village of Oreshets

       Revenues of Bulgaria's wireless telecom MobilTel fall 13.1% y/y in Q1

 

 

 

Articles:

 

MACROECONOMY:

Retail sales in Bulgaria rise 3.9m/m in March 2012 – Eurostat

The volume of retail sales in Bulgaria rose by 3.9% m/m in March, the first positive monthly growth and the highest increase for the month among the EU member states, Eurostat data showed. on an annual basis the retail trade volume continued to decline an in March it posted a 1.8% annual drop, down from February's 6.4%. In all EU member states, growth in retail sales reached 0.7% m/m and 1% y/y in March, reversing February's 0.5% m/m and 1.1% y/y declines. The national statistical institute will publish detailed data tomorrow (May 8). 

Bulgarian Economy May Recover Soon – Banker

Stilyan Vatev, CEO of United Bulgarian Bank (UBB), has suggested that theBulgarian economy has sufficient potential to recover from the crisis soon, as long as its positive sides are put to use. Speaking Tuesday at a round table titled "Protection and Development of Bulgarian Production – a Factor for Emerging from the Crisis", Vatev suggested that Bulgaria had to focus on agriculture, upper-class tourism, the construction of transport and logistics centers and energy transmission networks. Meanwhile, sociologist Kancho Stoychev, co-owner of the Sofia branch of the BBSS Gallup International polling agency, presented a survey indicating that 70% of the consumers would buy Bulgarian goods if that were sold on equal conditions with imported items. 80% of the polled said they preferred Bulgarian food products, according to Stoychev's data. Stoychev and Vatev claimed that one way to stimulate Bulgarian production was to regulate the relations between producers and big retailers. The two drew attention to abusive practices of major retailers operating in Bulgaria, such as demands for discounts of up to 60% from local producers, a range of fees for placing their products on the shelves and delays in payments by up to 90 days.

Bulgaria's retails sales down 1.4% y/y in March

Retail sales dropped by real 1.4% y/y in March after declining by 5.6% y/y in the previous month, according to seasonally unadjusted data of the statistics office. Sales of clothes and shoes as well as household appliances and furniture continued falling in March - by 21.4% and 10.8%, respectively. on the other hand, sales of pharmaceutical products and computers registered a growth of 9% y/y and 5.6% y/y, respectively, making them the best performing sectors during the month. Sales of food, drinks and tobacco rose by 2.1% y/y, up from February's 1.1% y/y growth. In seasonally adjusted terms, retail sales dropped by 3.2% y/y on March, decelerating from the 6.6% annual decline in the previous month. Calendar adjusted data indicated 1.8% y/y drop in retail sale, also down from February's 6.4% decline. 

 

Bulgaria's industrial output down 3% y/y in March

Bulgaria’s industrial production index declined by real 3% y/y in March, preliminary data of the statistics office shows. The contraction sustained for a fourth month in a row, decelerating from revised 3.6% y/y in Feb 2012. The manufacturing sector reversed February's 4.7% annual contraction and inched up by 0.2% y/y in March. The sub-sectors that contributed positively were manufacturing of drinks (7% y/y growth in March compared to 18.5% y/y decline in Feb), chemical products manufacturing (24.9% y/y growth in March compared to 17.8% y/y decline in Feb), manufacture of electric devices (11.9% y/y growth in March compared to 0.3% y/y decline in Feb). The mining industry also sustained the positive trend but the growth decelerated to 4.1% y/y in March from 9.3% y/y in Feb, mainly due to the metal ore mining sub-sector, which expanded by 7.5% y/y compared to February's 43.9% y/y growth. The utilities sector posted deteriorated results in March, as the contraction in output sped to 14.3% y/y in March, up from 4.1% y/y in Feb. The number of industry branches, which posted annual growth in March, was 14 out of 27, as compared to 10 in the previous month. In seasonally-adjusted terms, the industrial production rose by 1% m/m but fell by 2.7% y/y in March. The industrial turnover index dropped by 1.7% y/y in March after rising by revised 4.9% y/y in Feb. Domestic turnover went up by 1.7% y/y while exports dropped by 6.5% y/y. IntelliNews comment: The industrial output is likely to remain in negative territory in the mid-term. Falling foreign demand, as evidenced by industrial turnover abroad falling already in March, and still weak domestic sector will continue to hamper industry output growth. Exports dropped by 6.1% y/y in Jan-Feb, , following a robust expansion in 2011. 

Bulgaria's Exports to EU Down by 8.1% in Jan-Feb 2012

In the first two months of 2012, Bulgaria's exports to the EU exceeded BGN 3.3 B, decreasing by 8.1% from the same period in 2011. In the period January - February 2012, Bulgaria's imports from EU countries increased by 6.7% on the year to BGN 4.1 B (CIF prices), according to data of theNational Statistical Institute (NSI). Two-thirds of Bulgaria's exports to the EU went to five countries – Germany (11.9% decrease from January-February 2011), Italy (7.9% increase), Romania (23.6% decrease), Greece (17.3% decrease) and France (12.6% increase). January and February 2012 were the first two months to bring a decrease after a constant increase in exports in 2011. Exports fell by 7.3% in January and by 8.9% in February, as compared to the same months in 2011. In the period January-February 2012, Bulgaria's foreign trade balance (export FOB - import CIF) with the EU was negative and amounted to BGN 709.4 M. At FOB/FOB prices (after eliminating transport and insurance costs on imports) thetrade balance was also negative and amounted to BGN 520 M. According to NSI data published about a month ago, Bulgaria's total exports in the first two months of 2012 came in at BGN 5.7 B, while imports amounted to BGN 6.9 B.

IMF Forecasts 0.8% GDP Growth in Bulgaria

Bulgaria should not use resources from the so-called Silver Fund and instead issue euro obligations to cover the coming installments on the foreign debt and thus guarantee the fiscal reserve, is the counsel in the latest report of the International Monetary Fund written after the Fund's latest mission to Bulgaria from May 2 to 9th. 
"As with the current situation, it would be most wise to raise the level of the fiscal reserve and avoid its decrease," the IMF wrote.  The Silver Fund is a part of the fiscal reserve, among its main function is guaranteeing the stability of the fisc with regard to pension payments in a future doomed with growing numbers of pensioners and far from positive demographic growth. IMF commentaries come as a reaction to Bulgarian Government's intent to invest 30% of its resources into state securities. "The sensible policies and strong buffers have secured Bulgaria sustainability in the times of the world financial crisis," Bulgaria's Minister of Finance, Simeon Djankov quoted the report in Parliament. However, it is the Government's opinion that Bulgaria's growth is still too slow mostly due, as experts believe, to foreign political factors. The GDP in the country will reach 0.8% in 2012 and 1.5% in 2013, the IMF forecasts.  Bulgaria needs more decisive structural reforms for a higher growth, the IMF document reads. The IMF forecasts an inflation in the framework of 2%. The IMF recommends that Bulgaria starts social programs with Euro funds or with money which will come if the grey economy comes to light. The reforms for an increase of VAT collection give good fruit and deserve congratulations, the IMF document reads. The pension reform which was recently adopted will bring significant savings of 4% from the GDP in a mid-term plan, Bulgaria's Finmin stated. "We have undertaken activities for the decrease of the additional risks for the budget on behalf of the state-run companies in the energy and transport sectors. We also have to find a solution for the increasing fiscal pressure on the expenditures for healthcare in a mid-term aspect," Mr Djankov said further. "The bank system in Bulgaria is well capitalized, with good liquidity and with an effective bank supervision," Simeon Djankov underlined as he did not miss to point out that the IMF reports for the bigger part of the EU countries are more negative.

 

Bulgaria's exports growth recovers in Mar, trade gap widens

Bulgaria’s foreign trade deficit expanded to BGN 1,570.7mn (EUR 803.1mn) in the first quarter of the year, up from BGN 394.4mn a year earlier, preliminary data of the statistics office shows. In March alone, the gap added 20.2% m/m and stood at BGN 639.3mn, compared to BGN 284.7mn deficit in March 2011. Trade balances with both EU and non-EU states were negative. The EU states deficit accounted for 56.6% of the total gap in Jan-March, up from 36.4% in the year-ago period.  Total exports fell by 3.3% y/y in Q1, reflecting contracting foreign demand. The drop decelerated from 6% y/y in Jan-Feb, due to 1.6% y/y increase registered in March. This is the first annual rise in exports since the start of the year. Positive developments in exports to non-EU states continued in March too although at a slower rate - up 2% y/y, slowing from 10.6% y/y growth in February. Exports to EU-states also contributed to the rise in total exports as they returned to growth in March (1.3% y/y) following February's 8.9% y/y drop. Imports grew by 8.9% on the year in Jan-Mar and by 11.4% y/y in March alone. Still, the growth rate is slower compared to the 21.2% y/y increase registered last year.  IntelliNews comment: The rising imports value is mainly a result of recent increase in international oil prices. Due to still weak domestic demand imports volume should not rise substantially but the price effects will continue to push them up, although at a slower rate. This, coupled with weakening foreign demand, especially in the EU, will continue to affect negatively Bulgaria's foreign trade balance throughout the year. 

 

Bulgaria's foreign trade
Months/Quarter	Exports	Imports	Trade gap	Exports	Imports	Trade gap
	Total (BGN mn)	Total (BGN mn)	Total (BGN mn)	y/y	y/y	y/y
Jan-11	3,117.3	3,153.8	-36.5	74.6%	45.9%	-90.3%
Feb-11	2,937.1	3,010.3	-73.2	50.4%	37.2%	-69.7%
Mar-11	3,301.6	3,586.3	-284.7	50.4%	26.4%	-55.8%
Q1 2011	9,356.0	9,750.4	-394.4	57.7%	35.5%	-68.7%
Q2 2011	9,516.8	10,879.8	-1,363.0	28.1%	18.9%	-20.6%
Q3 2011	10,592.1	11,021.8	-429.7	22.6%	22.0%	8.9%
Q4 2011	10,095.1	11,770.0	-1,674.9	19.7%	12.4%	-17.6%
2011	39,560.0	43,422.0	-3,862.0	30.0%	21.2%	-28.6%
Jan-12	2,804.4	3,203.9	-399.5	-10.0%	1.6%	994.5%
Feb-12	2,889.3	3,421.2	-531.9	-1.6%	13.6%	626.6%
Mar-12	3,354.3	3,993.6	-639.3	1.6%	11.4%	124.6%
Q1 2012	9,048.0	10,618.7	-1,570.7	-3.3%	8.9%	298.3%
Source: statistics office

 

INVESTMENTS:

Over EUR 100mn Qatari capital expected to flow to Bulgaria

Bulgarian Foreign Minister Nickolay Mladenov and his Qatari counterpart Khalid bin Muhammad al-Atiyah are drafting a framework agreement for investing an initial EUR 100mn in different projects in Bulgaria, BTA news agency reported. At a meeting in Bulgaria last week, the officials have discussed investment opportunities in the infrastructure, health care, agriculture, real estate, tourism. Of particular interest for al-Atiyah is the country's project for the construction of 300km-long motorway from Northern town of Rousse to the border of Turkey, for which the regional ministry will be selecting an investor by the end of the year. 

 

China Will Invest 1.5 Billion Dollars In Bulgarian Energy Projects

"China began its largest investment in Bulgaria in 2011. The investment projects should be completed by 2015, and their total value will be 1.5 billion dollars. Beijing devoted this large-scale amount to finance several projects in the energy field," the President of the Bulgarian-Chinese Chamber of Commerce, Victor Azmanov, reported during a press conference in Sofia. The investment will be conducted primarily through the state company XEMC Windpower, and about $50 million under this program has already been invested in Bulgaria. "The investment will cover not only the construction of energy facilities, but also several factories for the assembly of equipment for new power plants," Azmanov said. He added that currently the Bulgarian-Chinese Chamber of Commerce is looking for suitable plots of land to build the new factories that will create between 300 and 500 new jobs. "The Chamber of Industry is satisfied. This is the second biggest injection of capital in Central and Eastern Europe (CEE) by the Chinese. The biggest investment was the purchase of a factory in Hungary, which cost Chinese entrepreneurs $1.6 billion. In Bulgaria, however, further investments are expected because the People's Republic of China has shifted its economic focus from Western Europe to the eastern parts of the continent" Victor Azmanov added. "Other than the energy sector China is additionally willing to pour money into infrastructure, agriculture, and the development of alternative medicine. China also has an interest in building a plant for electric vehicles in Bulgaria, but the negotiations on this issue are still at preliminary stages," Azmanov said.

Bulgaria Invites Israeli Companies to Invest in Infrastructure

Bulgaria's Transport Minister Ivaylo Moskovski has invited companies from Israel to take part in tenders for the construction of transport infrastructure in the country. Moskovski has also invited Israeli firms to participate in tenders for the concession of Bulgarian ports and airports. On Tuesday, Moskovski met with his Israely counterpart Yisrael Katz in Israel. The Bulgarian Transport Minister told his colleague that projects worth a total of BGN 3.6 B (approximately EUR 1.84 B) are currently being fulfilled in Bulgaria courtesy of EU's Transport Operational Program. Bulgaria will rely on public-private partnerships for the projects it cannot finance with EU money, Moskovski told Katz, adding that he believes Israeli companies will be interested in the concession of Bulgarian ports and airports.

Bulgaria's 2011 FDI to Reach EUR 1.6 B - Agency Chief

Bulgaria's final foreign direct investment for 2011 will probably amount to EUR 1.6 B, according to Borislav Stefanov, head of the InvestBulgaria Agency. "Foreign direct investment for 2011 has already surpassed EUR 1 B. I suppose that 2011 will be similar to 2010 in that regard, i.e. Bulgaria's final FDI figure will be about EUR 1.6 B," Stefanov told BNR. The Director of the InvestBulgaria Agency explained that there is a discrepancy in the figures about Chinese investments in Bulgaria that are provided by the Bulgarian National Bank and the Chinese sources. "According to the data of the InvestBulgaria Agency, the Chinese investments in Bulgaria are a little under EUR 60 M for the period between 1996 and 2011. According to Chinese data, this sum is over EUR 600 M. The discrepancy can be explained with the fact that BNB's data is based on the transactions between Bulgarian firms with foreign shares and their parent companies," he said. Stefanov also commented on the upcoming visit of Qatar's Prime Minister in Bulgaria, saying that Bulgaria has a number of projects for which it can seek Qatari investments.

 

COMPANIES AND INDUSTRIES:

Construction Sector Registers Growth in March

According to preliminary data of the National Statistical Institute (NSI), in March 2012, the production index in section Construction calculated on the base of seasonally adjusted data was 1.8 per cent more than in the previous month. In March 2012 working day adjusted data showed an increase by 2.1 per cent in the construction production, compared to March of 2011. In March 2012 the construction production was above the previous month's level. The civil engineering production index, calculated from seasonally adjusted data, increased by 3.4 per cent and the production of building construction - by 0.5 per cent. on an annual basis in March 2012, the increase of production in construction, calculated from working day adjusted data was determined mainly from the 7.1 per cent growth observed in the civil engineering sector, while the building construction fell by 1.4 per cent.

 

Bulgaria puts Technoexportstroy for sale, lowers price to EUR 30.7mn

Bulgaria's privatisation agency has opened a new procedure for the sale of the full-stake of state construction company Technoexportstroy. The initial price is set at BGN 60mn (EUR 30.7mn), down from BGN 68mn at the previous auction, which failed as neither of the three companies that bought tender documents placed a bid [the companies were Greece's Aktor (constructing segments of Trakia and Struma Motorways), and two local companies - Advance Properties and AT Engineering 2000]. Technoexportstroy is headquartered in the capital city of Sofia. It provides project services, which include engineering, design, architectural and similar services; operations and maintenance services, and construction services, which include direct-hire construction and construction management services.

Bulgaria's M&A Market to See Smaller Number of Deals in 2012 - Report

The mergers and acquisitions (M&A) market in Bulgaria is expected to shrink to a total of 30-60 deals in 2012, with the total volume of amounting to up to USD 700 M, according to Diana Nikolova from the Ernst & Young (EY) consultancy. In a Wednesday interview for Bulgaria on Air, she said that the consumer services sector and the financial and pharmaceutical sectors were expected to generate the biggest number of acquisitions. Meanwhile, agriculture and the automotive and mining industries were expected to dispose of unnecessary assets, Nikolova specified. According to the analysis of Ernst & Young, there is a global trend of leading corporations avoiding major restructuring and business development projects to focus on inside issues caused by the economic crisis. Companies' biggest fears are related to payment delays in the construction sector, with half of the managers expecting an increase in bad loans in the sphere. According to the experts, an increasing number of companies are willing to sell and the buyers' market will expand. EY suggests that investors will opt for cautiousness rather than trust, which will lead to the anticipated decrease in the number of deals as compared to previous years. At the same time, around 30% of the top managers expect financial market conditions to deteriorate over the next six months and every third company is pessimistic about the economic outlook.

Bulgarian drugmaker Sopharma opens subsidiary in Ukraine

Bulgarian blue-chip pharmaceuticals manufacturer Sopharma (3JR) has decided to establish a unit in Ukraine, the company announced on its website. The new subsidiary will have a share capital of UAH 1mn (EUR 0.096mn) and is expected to streamline Sopharma's trading business in Ukraine. Sopharma posted 15% annual increase in revenues in April. Domestic sales dropped by 6% y/y during the month while exports added 23% y/y. In Jan-Apr, the company's sales revenues rose by 1% y/y. 

 

5 MW Solar Plant Unveiled at Northwestern Village of Oreshets

CEZ Bulgaria unveiled its first photovoltaic power plant Thursday. The 5 MW facility was built in the village of Gara Oreshets, Dimovo Municipality, on an area of 10 ha which in the past used to have a wood-processing factory, CEZ said in a press release. The project cost 10 million euros. In the next 15 years the photovoltaic power plant will generate 5,762 MWh of green energy per year, enough to provide power to 3,840 households, and save 6,900 t of CO2 emissions annually. Attending the official ceremony were CEZ Chairman of the Management Board and Chief Executive Officer Petr Dokladal, Czech Ambassador in Bulgaria Pavel Vacek, Vidin Regional Governor Tsvetan Assenov, among others. The plant was designed and built for three months by the German company Solea.

 

Revenues of Bulgaria's wireless telecom MobilTel fall 13.1% y/y in Q1

The revenues of Bulgaria's wireless telecom service provider MobilTel declined by 13.1% y/y to EUR 115.9mn in Q1, according to the financial report of MobilTel's parent, Telekom Austria. The contraction sped from 9.7% y/y in the previous quarter. It was due to lower monthly fee and traffic revenues and competition that caused lower prices. Decline in usage as a result of the challenging macro-economic environment also pushed revenues down.  The earnings before interest, taxes, depreciation and amortisation (EBITDA) dropped by 24.1% y/y to EUR 49.1mn, accelerating from 19.2% y/y in Q4. The operating income declined to EUR 1.6mn on lower revenues and higher depreciation and amortisation charges.
The customer base of Mobiltel in terms of active SIM cards (wireless segment) added 4% y/y to 5.5mn in Q1. Subscribers on contracts reached 69.2% of total at the end of March, up from 67.4% as of end-December. The company's market share was at 48.4% at end-March as compared to 48.6% at the end of December and 49.6% at end-March 2011. The average revenue per user dropped by 20% y/y to EUR 6.1 in Q1. 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea