불가리아 주요 경제뉴스 (18 - 23 May 2012)

BULGARIAN ECONOMIC TOP NEWS DIGEST

WEEKLY REPORT (18 - 23 May 2012)

 

Sections/headline briefs:

 

MACROECONOMY:

       EBRD keeps Bulgaria’s 2012 GDP growth forecast at 1.2%

       Grey Sector in BG Economy Accounts for 40 %

       EBRD Warns of Grexit Fallout in Bulgaria, Romania, Serbia

       Science Academy Forecasts 1.3% Growth for Bulgaria in 2012

       Bulgaria’s finance minister Dyankov sees euro adoption in up to three years

 

INVESTMENTS:

       Hydropower Plant to Be Built on Toundja Dam - Turkish Ambassador

       Qatar to deposit USD 200mn in Bulgaria’s c-bank as guarantee for investments

 

COMPANIES AND INDUSTRIES:

       6 Energy Giants to Bid for Exploring Bulgarian Black Sea Gas Field

       Turnovers in Bulgaria's Transport Sector Fell by 10.5% Y/Y

       Bulgaria's Q1 Wine Exports Rise 12.7% Y/Y

       Bulgaria Moves to Ratify Nabucco Agreement

 

 

 

 

 

 

 

 

 

Articles:

 

MACROECONOMY

EBRD keeps Bulgaria’s 2012 GDP growth forecast at 1.2%

The European Bank for Reconstruction and Development (EBRD) has kept its growth forecast for Bulgaria for this year at 1.2%, the bank said in the latest edition of its Regional Economic Prospects published a few days ago. Bulgaria’s GDP growth in 2012 is forecast to be above the 1% average for southeastern Europe, where the country along with Albania and Romania will be the second-fastest growing economy. Macedonia will post the strongest GDP growth of 1.3% in the region. The EBRD expects recovery in Bulgaria to be modest this year, in contrast to earlier forecasts of vigorous growth mainly due to a slowdown in foreign demand. “However the government’s adherence to fiscal prudence is the strongest in the SEE region and the authorities remain fully committed to the currency board and entry in due course into the ERM-II mechanism,” the EBRD said. Bulgaria’s economy is projected to post a more robust growth of 2.5% in 2013. Inflation in the country is to ease to 2% in 2012 from 3.1% last year. 

 

Grey Sector in BG Economy Accounts for 40 %

The share of the grey sector in the Bulgarian economy accounts to 40 percent, shows the survey themed "Restriction and prevention of the informal economy" carried out by the Industrial Capital Association (ICA) in Bulgaria. The survey covers the period of 2009-2013. Tourism, construction and healthcare are the three sectors where the share of the grey economy is the largest (about 70 percent,) according to darikfinance.bg. Engineering industry and post services boast the lowest level of parallel economy, said Emilia Chengelova, expert of the ICA. In the last two years there has been a pronounced trend towards the growth of the grey sector owing to the financial crisis. 

 

EBRD Warns of Grexit Fallout in Bulgaria, Romania, Serbia

The European Bank for Reconstruction and Development's chief economist has called for erecting a "ring of defense" around Bulgaria, Romania and Serbia to help them cope with the fallout from a possible Greek exit from the euro zone. "There are already measures in place [to deal with the effects of potential deleveraging by banks]," Erik Berglof said, as cited by CNBC. Berglof spoke in London, where EBRD annual meeting is taking place. "We don't speak about it much but... in these times of crisis one has to understand the importance of financial stability." "We still think there is a lot of willingness in Europe and some hope that there will be a solution in Greece," he added. At the beginning of the year Berglof started to drum support for a new Vienna Initiative in a bid to stop an outflow of capital from emerging Europe. Berglof warned that west European countries' scramble to protect themselves from the debt crisis while banks shrink their balance sheets risked a double blow to the region. He said he hopes to contain the urge of many banks to sell or reduce assets to hit the new capital adequacy targets. "We shouldn't have same expectations in terms of exposure commitment that we had (in 2009). There is an adjustment that needs to happen. We just have to make sure it happens in a more managed, gradual way. That is my hope." The EBRD and other agencies have been working with emerging economies on the outskirts of Europe, such as Bulgaria, Romania, and Serbia, which are most at risk of a slow-down in the wake of Greece's financial crisis. Greek banks hold nearly a 30% of the Bulgarian banking market, a 20% share of the bank loans and one-third of all deposits. Some of the biggest lenders in Bulgaria are managed by Italy's UniCredit, Greece's National Bank of Greece, Hungary's OTP and Austria's Raiffeisen. Other Greek banks present in Bulgaria include EFG Eurobank, Piraeus, Emporiki and Alpha Bank. Experts have warned that Bulgaria, the European Union member boasting one of the the bloc's smallest budget deficit, risks seeing its banks sucked under by the fiscal sins of neighboring Greece. Bulgaria's central bank and finance minister however have repeatedly tried to assuage fears over funds outflow from Greek bank subsidiaries in the country to headquarters in Greece, saying this is part of the free movement of capital.

 

Science Academy Forecasts 1.3% Growth for Bulgaria in 2012

The Bulgarian economy will grow with 1.3% during 2012, according to an analysis by the Institute of Economics at the Bulgarian Academy of Sciences revealed Monday. The forecast is considered to be optimistic, but is still more conservative than the 1.4% that were recently voiced by Bulgaria's vice-Minister of Finance Boryana Pencheva. on the other hand, the Bulgarian National Bank's assesment has it that GDP for the year will grow by just 0.7%. According to calculations of the International Monetary Fund, growth in Bulgaria will be 0.8%, while the European Commission is the most pessimistic with its 0.5%growth forecast. Upon revealing the results of the study, Bulgarian Academy of Sciencesresearcher Grigor Sariyski also commented on the state of Bulgaria's bank system, which according to him is overall stable. "Part of banks in Bulgaria might face problems when covering criteria for capital adequacy, but all in all they have leeway to act," commented Sariyski. He explained that the main issues that lead to this situation is the high amount ofbad credits, as well as the high liquidity. According to the researcher, we might witness some "reconfigurations" in the bank system, but it is bound to remain reliable on the whole.

Bulgaria’s finance minister Dyankov sees euro adoption in up to three years

The eurozone will survive the crisis and Bulgaria expects to join in within two to three years, Bulgaria’s finance minister Simeon Dyankov told Reuters. However, given the current restructuring of the union and its institutions, no timeline can be set, Dyankov added. According to Dyankov, only four of the EU’s 27 member countries, namely Estonia, Finland, Sweden and Bulgaria meet the Maastricht criteria. 

 

 

INVESTMENTS:

 

Hydropower Plant to Be Built on Toundja Dam - Turkish Ambassador

As part of the agreement between Bulgaria and Turkey on the construction of a dam on the River Toundja at their common border, a hydroelectric power station will be built as well, Turkey's Ambassador in Sofia Ismail Aramaz said here on Monday. In his words, the construction of the power plant will be commissioned to a private company. The diplomat also said that the two countries' gas companies are scheduled to meet on Wednesday to discuss the construction of an interconnector between their gas transmission systems. According to Aramaz, the talks will focus on the technical parameters of the project which are complicated and require heavy investment. The Ambassador added that Bulgaria will start exporting live animals to Turkey within a couple of months. He also said that over 7,000 Turkish students attend higher educational establishments in Bulgaria. In Varna, Aramaz conferred with city Mayor Kiril Yordanov.

 

Qatar to deposit USD 200mn in Bulgaria’s c-bank as guarantee for investments

Qatar PM Sheikh Hamad Bin Jassim al-Thani said his country will deposit USD 200mn at Bulgaria’s central bank as a guarantee that the Gulf state is serious about plans to invest in the southeastern European country, Focus news agency reported. Qatari PM, who is on a two-day visit to Bulgaria, held a meeting with PM Boiko Borisov to discuss a number of investment projects. Qatar is to invest some USD 100mn in developing agriculture, tourism and infrastructure projects in Bulgaria. The two countries signed eight memorandums of understanding about cooperation in the fields of farming, cattle-breeding, food trade, tourism, real estate, mining, health and culture. 

 

 

 

 

COMPANIES AND INDUSTRIES:

6 Energy Giants to Bid for Exploring Bulgarian Black Sea Gas Field

Six leading international oil and gas companies have bought documents for the tender for the development of the potential deepwater gas field Khan Asparuh off Bulgaria's Black Sea coast. The companies are British-based Melrose resources, which is already developing a number of smaller gas fields in the Black Sea shelf, Austrian OMV, US ExxonMobile, French Total, Spanish Repsol and Anglo-Dutch Royal Dutch Shell. The energy giants are expected to file bids by June 17, the bid submission deadline, according to Delyan Dobrev, Minister of Economy, Energy and Tourism, as cited by Standardd daily. The exploration works on the Khan Asparuh block are expected to start within a month, during which the government should pick a contractor, while the Ministry of Environment and Water should approve the drilling program of the tender winner. Gas production could start in 2-3 years' time, provided that the explorationactivities point to substantial gas reserves. According to Doberv, there is a very good chance that this will happen, because some 42-84 billion cubic meters of natural gas have been recently proved in Romanian waters near the Khan Asparuh block. Dobrev believes that this is the reason behind the large number of prominent candidates for exploring the Khan Asparuh block. The Khan Asparuh block spans 15 000 square kilometers in Bulgaria's Black Seawaters. The water is up to 2 kilometers deep and the site is hard to explore. Companies have once given up the site, but the Bulgarian government is calling a new tender. According to preliminary geologic studies, the Khan Asparuh block may have 500 billion cubic meters of natural gas.

 

Turnovers in Bulgaria's Transport Sector Fell by 10.5% Y/Y

Turnovers in the IT industry, travel agency and tour operator activities, security and investigation activities and office administration activities registered annual increases in the first three months of 2012, according to information of the National Statistical Institute (NSI). According to NSI data about turnover indices in services in Q1, 2012, the transport sector registered an annual decrease of over 10%. Turnover indices in the advertising and market research sector and in architectural and engineering activities also posted annual declines. According to preliminary data for Q1 2012, the total turnover index for the "Transportation, storage and post" sector, calculated on the basis of seasonally adjusted data, was 4.4% higher than the previous quarter. The upward trend was registered due to the increases in land transportation activities and in warehousing and transportation support activities by 6.8% and 5.2% from the previous quarter. At the same time, the water transport segment registered a decrease of 7.3%, air transport declined by 1.4% and postal and courier activities fell by 6.7%. The total turnover index in the „Information and communication" sector decreased by 0.7% quarter on quarter. A substantial decrease of 24.4% was registered in the segment of "Motion picture, video and TV program production, sound recording and music publishing activities", while information services fell by 5.7%. Quarter on quarter increases were also registered in publishing activities (up by 6%) and telecommunications, computer programming, consultancy and related activities (0.5%). In the sector of "Other business services", the highest quarter on quarter increases were observed in "Travel agency and tour operator activities and other reservation services" (up by 61.5%) and in office administration activities and other business support activities (up by 12.0%). The working day adjusted total turnover index in the "Transportation, storage and post" sector fell by 10.5% compared to the fourth quarter of 2011. The biggest reductions were recorded in water transport (down by 29.8%), land transport (down by 14.4%) and air transport (down by 10.3%). Warehousing and transportation support activities increased by 2.4%. In Q1, 2012, the total working day adjusted turnover index in "Information and communication" sector increased by 1.5% compared to Q1, 2011. The increase was mainly due to the increases in the segments of "Computer programming, consultancy and related activities" (15.3%) and "Publishing activities" (10.7%). The most significant decrease of 20.7% was registered in the segment of "Information service activities". In the sector of "Other business services", the biggest year on year increases were recorded in "Travel agency and tour operator activities and other reservation services" (up by 14.8%) and security and investigation services and office administration services (up by 11.8%). A substantial decrease of 28.2% was registered in "Other professional, scientific and technical activities". "Advertising and market research" declined by 19.7% and "Architectural and engineering activities" fell by 16.1%.

 

Bulgaria's Q1 Wine Exports Rise 12.7% Y/Y

Bulgarian wine exports rose by an annual 12.7% to 11.69 million litres in the first quarter of 2012, the country's agriculture ministry said. Sales of Bulgarian wine on the domestic market amounted to 23.72 million litres in the January-March period, the ministry said in a statement on Saturday providing no comparative figures. In the first three months of the year Russia was the country's main foreign market for wine, with 4.47 million litres sold there, or 38.2% of the entire export volume. Bulgarian wine exports to Poland, Romania, Germany, Cyprus and China, among others, increased through March, the statement added. Bulgaria produced a total of 108 million litres of wine last year, from which it exported some 58.5 million litres, with Russia being the biggest foreign market.

 

Bulgaria Moves to Ratify Nabucco Agreement

Bulgaria's Parliament is expected to ratify the agreement between the BulgarianNabucco company and the international Nabucco Consortium for the furthering of the eponymous gas pipeline project. The agreement was approved by the country's Parliament in March. The ratification is an obligation of every country party to the Nabucco project, with which countries commit to creating beneficial regulatory conditions for the execution of the project, and giving companies executing it the needed suport. The Nabucco project, started by Austria, Bulgaria, Hungary, Romania andTurkey, is part of the EU's so-called southern gas corridor, and is set to build a natural gas pipeline do deliver gas from the Middle East, Caspian and Central Asia through Turkey and on to Central Europe. Last Wednesday, the Nabucco Consortium presented a revised, smaller version of the gas pipeline project called Nabucco West to the consortium developing the Shah Deniz II gas field in Azerbaijan.

 

 

 

Reported by:

Georgi Iliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea