불가리아 주요 경제뉴스 (27 July – 3 August 2012)

BULGARIAN ECONOMIC TOP NEWS DIGEST WEEKLY REPORT(27 July – 3 August 2012)

 

Sections/headline briefs:

 

MACROECONOMY:

       BNB: Bulgaria's economy will improve slowly but surely

       Business sentiment in Bulgaria slightly improves in July

       Bulgaria's economy to post zero growth in Q2 - think-tank

       Bulgaria’s industrial PPI inflation slows to 3.3% y/y in June 2012

 

INVESTMENTS:

       Bulgaria Lacks Consistent Image outside EU - InvestBulgaria Agency Head

       Bulgaria Launches 15.6-M Worth Campaign to Seek Investors

 

COMPANIES AND INDUSTRIES:

       Soft drinks consumption in Bulgaria falls by 0.7% y/y in H1

       Seventh block at Bulgaria's Kozloduy NPP to be built by 2022

       Bulgaria Registers 27% Annual Increase in Diesel Production

       Sharks Inflate 40% Retail Price of Bread in Bulgaria

       Bulgarian Sopharma says H1 sales up 2%, export market expands

       Half of Bulgaria's SMEs fear bankruptcy

       Bulgaria Should Better Put on Hold New Power Plants

       Bulgaria to Grant 6-Year Concession for Kavarna Iztok Gas Field

       Bulgarian Firms Too Penniless to Invest in Innovations - Survey

 

 

 

 

 

 

 

 

 

Articles:

 

MACROECONOMY

BNB: Bulgaria's economy will improve slowly but surely

The Bulgarian National Bank (BNB) expects a slow but stable growth of the country's economy in the second half of 2012. The gradual growth of the economy will be followed by a gradual restoration of the consumption of Bulgarians who still feel pressed by the financial stagnation which reigns in all European countries. The BNB forecasts a growth of the foreign investments in Bulgaria in the second half of 2012, too. The foreign investments are expected to reach to between 3.5% and 4.5% from the country's GDP on an annual basis. The bank credit and deposit interests will continue to slowly decrease, the BNB also reports.

 

Business sentiment in Bulgaria slightly improves in July

In July, business sentiment in Bulgaria improved as the composite indicator rose by 1.1pps over the month, after stepping back in June, the monthly survey of the national statistics institute shows. Breaking down the indicator into branches shows that the improvement reflects more optimistic expectations in the manufacturing, trade and construction sectors. The services sector sentiment however deteriorated, which is unexpected in view of the seasonal output boost in this sector during the summer months. Sentiments in retail trade improved by 1.4pps due to more optimistic expectations about sales and new orders in next three month. Representative of the construction sector also access the business climate as improved. Activity in the sector is on the rise and their expectations in the next three months remain on the positive side.  In July, the business sentiments indicator exceeded its 12-month average for a fourth time since October 2011 and is heading towards the long-term average. Still, the sentiments remains below the long-term average and much lower compared to the sentiment in the pre-crisis levels, indicating that economic growth will be moderate in 2012. In annual terms, the business climate improved by 3.4pps, slightly higher than the 3pps improvement in June. 

 

Bulgaria's economy to post zero growth in Q2 - think-tank

Bulgaria's economy is likely to post zero-growth in Q2, according to the latest forecast of the Centre for Economic Development (CED). Economic growth for 2012 will reach 1% and this forecast is based on expectations for improved economic environment in H2. Bulgaria needs production driven economic growth, not one that is boosted by consumption, the think-tank pointed out. Therefore, data indicating falling gross added value but increasing final consumption are disturbing. In Q2 2012, the manufacturing sector, which was one of the best performing sectors in 2011, remained almost flat on the year but positive growth may be expected in H2 as industrial output has already registered positive y/y growth in Apr and May. Improving business sentiment also indicates that better performance of the sector may be seen in the second half of the year. The construction sector is also projected to improve. 

 

Bulgaria’s industrial PPI inflation slows to 3.3% y/y in June 2012

Growth of industrial producer prices decelerated to 3.3% y/y in June from 4.3% y/y posted in May, statistics office data shows. In monthly terms, the producer price index fell by 0.8%, down from 1% monthly decline in May. The lower inflationary pressure in June was due to deceleration of the price increase in the manufacturing industry (up by 2% y/y in June as compared to 3.4% y/y in May) and mining sector (up by 1.5% y/y in June as compared to 2.5% y/y in May). Production of chemical and tobacco products had an upward pressure on the index. Price growth in the utilities industry stayed unchanged over the month - at 6.8% y/y. The broader index including export sales also rose by 2.3% y/y in June, down from 3.2% y/y in the previous month. 

 

 

INVESTMENTS:

Bulgaria Lacks Consistent Image outside EU - InvestBulgaria Agency Head

A survey conducted by the InvestBulgaria Agency has shown that Bulgaria is little known outside the EU and lacks a consistent image in these countries. The survey included over 3000 companies based outside the country, of them 750 in Northern America, 1500 in Europe and 750 in Asia. "These results stress the need for promotional campaigns and media activities," saidBorislav Stefanov, Executive Director of the InvestBulgaria Agency, as cited by Darik radio. "Countries like Bulgaria need to be advertised abroad because many of the investment decisions in favor of a certain country start this way," he declared. "In 2011, investor interest was focused on outsourcing of activities, while this year it is the reverse and the interest is mainly concentrated on the automotive industry," Stefanov explained. The survey was conducted within the frames of a large-scale BGN 15.6 M project for promoting the advantages of investing in Bulgaria co-financed under the Competitiveness Operational Program. The project is aimed at assisting the establishment of a positive image of Bulgaria as an investment destination and increasing the country's recognizability among foreign investors. The project highlights 8 target sectors in which Bulgaria wants to attract foreign investors, including  machine building, electronics and electrical engineering, the chemical industry, the food industry, transport and logistics, IT, business process outsourcing and medical tourism. Over 162 000 sector brochures in 10 languages have been printed out and are yet to be distributed, including at a series of conferences and round tables outside Bulgaria aimed at presenting the investment climate in the country. The brochures contain information about Bulgaria, examples of leading companies and essential data about the corresponding industry. A BGN 4.5 M promotional campaign seeking to attract foreign investments in Bulgaria is to be launched in Europe, the US and Asia. The promotional materials emphasizing Bulgaria's advantages as an investment destination are to be aired by leading media outlets in end-2012/early 2013. A total of 9 international investors' forums, 3 conferences and 9 round tables devoted to the topic are to be organized, as well as with Bulgarian communities abroad.

 

Bulgaria Launches 15.6-M Worth Campaign to Seek Investors

"Bulgaria will be presented as an investment destination before companies from three continents - Europe, Asia and North America," CEO of InvestBulgaria Agency Borislav Stefanov informed. The organizer of the conferences will be The Financial Times together with a French company. The financing of the initiative worth BGN 15,6 M will be covered with resources from the Competitiveness Operational Program. The events will promote the advantages of the Bulgarian machine-building, electronics, chemical and food industries, transport, logistics and medical tourism.

 

 

 

COMPANIES AND INDUSTRIES:

Soft drinks consumption in Bulgaria falls by 0.7% y/y in H1

The consumption of soft drinks declined by 0.7% y/y to 670mn litres in H1 2011, the soft drinks producers association informed as quoted by investor.bg. The contraction narrowed from 5% y/y in Q1 and 7% last year. The deterioration was due to the restaurants segment mainly. Also, the association reports that prices have decreased slightly in H1 this year. Bottled water market is expanding as sales rose to 295mn litres in H1, compared to 293mn litres a year earlier. Industry representatives expect 1% higher sales of bottled water this year. The steepest decrease is registered by fruit juices (down by 5% y/y in H1). 

 

Seventh block at Bulgaria's Kozloduy NPP to be built by 2022

The new, seventh, generating unit at nuclear power plant Kozloduy may be built by 2022, depending on the talks with Russia's Rosatom, BTA reported citing Valentin Nikolov, CEO of Kozloduy NPP. Russian Atomstroyexport, a subsidiary of Rosatom, produced the 1,000 MW nuclear reactor for the Belene project but in April the government decided to abandon the plan to set up a second nuclear power plant in Belene and decided instead to install the 1,000 MW reactor at the existing Kozloduy plant. The project stands a good chance of attracting a strategic investor, according to Delyan Dobrev, economy minister. In early June, Kiril Komarov, the deputy CEO of Rosatom, said Bulgaria had invited the Russian state-owned nuclear company to participate in the project for building the seventh block at Bulgaria's nuclear power plant Kozloduy.  A separate entity with EUR 1.02mn equity was set up to manage the construction of the new unit. Valentin Nikolov said that five companies have filed bids to execute the preliminary study of the project - the winner will be announced by the end of the week. 

 

Bulgaria Registers 27% Annual Increase in Diesel Production

Production of unleaded gasoline increased by 11.3% on the year in June 2012, reaching 57 000 tons, according to data of the National Statistical Institute(NSI). Meanwhile, against the backdrop of increased electricity consumption during the summer season, Bulgaria registered a 1% monthly increase in electricity production to a total of 3 508 GWh. Bulgaria's electricity production registered a 5.9% decrease on an annual basis in June 2012. In June 2012, the production of solid fuels decreased by 33.6% to 1.81 tons year on year, while the production of liquefied petroleum gas fell by 9.1% over the same period. In June 2012, the production of diesel fuel decreased by 1.4% on the month and increased by 27% on the year. According to NSI data, electricity supplies increased by 1.4% on the month in June 2012. Fuel supplies registered decreases as follows: solid fuels by 32.1% to 2 million tons,LPG by 14.3% to 24 000 tons, unleaded gasoline by 6.1% to 46 000 tons, dieselfuel by 30.9% to 132 000 tons and natural gas by 11.1% to 185 million standard cubic meters.

 

Sharks Inflate 40% Retail Price of Bread in Bulgaria

Bread and pastry distributors and merchants inflate the retail price of bread by forty percent. This became clear from an interview of Mrs. Mariana Kukusheva, Chairperson of the Federation of Bakers and Confectioners in Bulgaria with the national television BNT. In her words, the wholesale price of bread varies between 0.55 lev and 0.65 lev for a loaf of 700 g, while the retail prices range between 0.80 and 1.34 lev. In other words, sharks and profiteers inflate the price of bread by as much as 40% by the time it reaches the final consumer. Agriculture Minister Miroslav Naydenov ruled out possible decrease of the VAT rate on foods by 8% as, in his words, such a move could compromise the stability of the state budget. Regarding possible increase in the price of bread, Minister Naydenov said that the market will determine whether and how much the retail price of bread could go up.

 

Bulgarian Sopharma says H1 sales up 2%, export market expands

The net non-consolidated profit of Bulgarian blue-chip pharmaceuticals manufacturer Sopharma (3JR) stayed flat on the year at BGN 24.9mn (EUR 12.7mn) in H1 2012, according to the company's results posted on the website of local stock exchange. Annual growth of operating costs exceeded the one of operating revenues - 10.2% y/y against 3.4% y/y. Financial revenues however offset the negative developments in the operating accounts, more than doubling y/y to BGN 8.1mn in H1 as a result of BGN 4.5mn dividend income. Total sales revenues rose by 2% y/y in H1. Domestic sales shrank by 12% y/y and accounted for 24.5% of all sales as compared to 28.5% in H1 2011. The company claims a 5% market share in the country in value terms and 13% of all drugs sales in Bulgaria in volumes. Exports sales rose by 7.2% y/y. The sales in Russia had the largest market share of 40% but stayed unchanged in value terms compared to a year earlier. The local market ranked second, followed by Ukraine with a 15% share in total sales of the company. 

 

Half of Bulgaria's SMEs fear bankruptcy

The survey findings of agency Noema send out very worrying signals since SMEs provide employment and incomes for over 70% of the workers in Bulgaria More than 50% of Bulgarian small and medium-sized companies fear bankruptcy, a survey has shown, fueling concerns that the economy's backbone will break as the crisis bites. Some 54% of the small and medium-sized enterprises in Bulgaria say the grim forecast of going bankrupt is a scarily realistic scenario, according to a poll, conducted by Noema agency, quoted by Sofia News Agency. Bulgarian small and medium-sized enterprises face huge obstacles as they try to grapple with the fallout from the economic crisis, pollsters say. They have problems to develop innovations and patent activities, lack access to financing or if they do, it is very limited as traditional financial institutions are reluctant to fund small businesses. The survey's findings send out very worrying signals since SMEs provide employment and incomes for over 70% of the workers in Bulgaria, analysts have commented. Reform-weary, plagued by crime and corruption and unready for EU membership – this is how Bulgaria appeared before its accession. Nevertheless, back then, private enterprise was successful, with far faster growth than in western Europe. Many companies, especially SMEs, however, fell by the wayside once they were faced with the new reality of EU competition, slumping exports, shrinking consumption and austerity measures.

 

Bulgaria Should Better Put on Hold New Power Plants

Bulgaria should better take a wait-and-see position before taking a final decision on the construction of its second nuclear power plant in Belene as there’s no investor for the project, said Angel Semerdjiev, head of the country’s energy watchdog – State Energy and Water Regulatory Committee (DKEVR.) Whatever power plant starts operating in Bulgaria now it will hardly be able to sign a long-term export contract that will guarantee sales of the generated electricity unlike the three Maritsa-Iztok hydropower plants where the US holds the majority share, Semerdjiev explained. DKEVR will try to revise some of the clauses in these contracts, if possible. "The truth is that we have 600 MW of photovoltaic plants, over 600 MW of wind turbines and the rest are minor hydropower plants and almost no biomass plants. There are biomass plants which are mostly powered by waste products. There is only one real biomass installation, which presented its proposal for a price per MW, and it is facing launch problems," Semerdjiev noted. "The difference between photovoltaic plants, wind farms, and biomass plants is huge. The investment process with photovoltaic plants lasts a month and a half, while with biomass projects it lasts years," the DKEVR Chair commented.

 

Bulgaria to Grant 6-Year Concession for Kavarna Iztok Gas Field

The Bulgarian government will grant British Melrose Resources a 6-yearconcession for natural gas extraction at the Kavarna Iztok field, according to the Council Of Ministers' press office. The decision is to be taken at a Cabinet meeting on Wednesday. The gas field is located in Bulgaria's Black Sea continental shelf and the exclusive economic zone and has a total area of 3.97 square kilometers. According to preliminary estimates, the move is expected to bring concession fee revenues of around USD 1.1 M per year. The Kavarna Iztok field will become the third field developed by Melrose Resources in Bulgarian Black Sea waters. The company is already extracting natural gas from the Kaliakra and Kavarnafields, the production covering around 15% of the country's natural gasconsumption.

 

Bulgarian Firms Too Penniless to Invest in Innovations - Survey

More than half of the Bulgarian firms fail to invest in innovations because they lack sufficient funds to do so, according to a survey of the Bulgarian Chamber of Commerce and Industry (BCCI). About 53% of the surveyed Bulgarian companies, which include firms from industry, services, and trade, have indicated that they do not use innovations in any way, and have listed a number of reasons for this situation. Based on its survey, the BCCI also claims that Bulgarian enterprises have serious difficulties taking advantage of EU funding under Operational Program "Competitiveness", which funds industrial and technological modernization, because of bureaucratic obstacles. About 27% of the respondents have indicated that they use innovations, including products of their own research and development activities. The major reasons listed include administrative burden, lack of own funds for co-funding or bank guarantees, and the instability of the economic environment. only 5% of the surveyed companies have indicated willingness to invest more than 50% of their profits in innovations.

 

 

 

Reported by:

GeorgiIliev

KOTRA Sofia

Korea Trade-Investment Promotion Agency

Commercial Section of the Embassy of the Republic of Korea