Bulgaria Country Report - April, 2016

Bulgaria Country Report - April, 2016 This report covers the key macroeconomic, financial and political releases for Bulgaria for the period since April 17, 2016.

Bulgaria’s real GDP growth decelerated to 2.9% y/y in the first quarter of 2016 from 3% y/y in the previous three months, a seasonally-adjusted statistics office flash estimate showed on May 13.

The European Bank for Reconstruction and Development (EBRD) revised upwards Bulgaria’s 2016 GDP growth forecast to 2.5% from 2% projected in November. In the spring edition of its European economic forecast, the European Commission (EC) raised its forecasts for Bulgaria’s GDP growth in both 2016 and 2017, to 2% and 2.4%, respectively, from 1.5% and 2% projected in February.

Bulgaria's consumer sentiment improved during the three months to April, with the confidence indicator rising 1.8 points to -26.9, its best level since April 2007.

Bulgaria's business confidence deteriorated m/m in April. The industrial production growth accelerated to 3% y/y in March from 2.7% y/y in February. The construction output went down 9.3% y/y in March, after decreasing by revised 5.2% y/y the month before. Retail sales (at constant prices) climbed 6.2% y/y in March, speeding up from a 3.3% y/y rise in February.

Key points:
The CPI decreased by 2.2% y/y in April after dropping by 1.5% y/y in March
Bulgaria reported a consolidated budget surplus of BGN2.35bn (€1.2bn) in January-April, equal to some 2.6% of projected GDP, preliminary data from the finance ministry showed
The country reported a current account surplus of €168.3mn in January and February, reversing a deficit of €318.1mn in the first two months of 2015

Bulgaria’s consumer confidence reaches 9-year high in April 6
Bulgaria’s average per capita income rises 4.2% y/y in Q1 6
Bulgaria's long-term convergence interest rate declines to 2.44% in April 7
1. GDP 7
Bulgaria’s GDP growth slows slightly to 2.9% y/y in Q1, flash estimate shows 7
EBRD raises Bulgaria’s 2016 GDP growth forecast to 2.5% 8
EC raises Bulgaria’s 2016, 2017 GDP growth forecasts 9
2. Inflation 9
Bulgaria’s CPI deflation deepens to 2.2% y/y in April 9
Bulgaria’s annual PPI deflation deepens to 4.1% in March 10
3. Industry and Trade 11
Bulgaria’s business climate worsens in April 11
Bulgaria’s industrial production growth speeds up to 3% y/y in March 12
Bulgaria's construction output drops 9.3% y/y in March 12
Bulgaria's building permits, new constructions data largely positive in Q1 13
Bulgaria's retail sales growth accelerates to 6.2% y/y in March 13
4. Labour Market 14
Bulgaria's unemployment rate drops to 9.3% in April, labour agency says 14
Bulgaria’s unemployment rate rises q/q to 8.6% in Q1, labour force survey shows 14
Bulgarian real gross wage growth at 9.4% y/y in February, March 15
5. Tourism 16
Bulgaria’s accommodation revenue rises 8.8% y/y in March 16
Foreign tourists in Bulgaria up 10.9% y/y in March 16
Bulgaria reports budget surplus of 2.6% of GDP in January-April 17
Bulgaria’s fiscal reserve rises 34% in March 17
Bulgaria sells €51.1mn of 10.5-year T-bonds, yield drops 18
Bulgaria’s government debt rises 9% y/y at end-March 18
Bulgarian banking sector profit rises 7% y/y in Q1 19
Fitch affirms Bulgaria’s FIBank at B- with stable outlook 20
Around €400mn could be recovered at Bulgaria’s bankrupt Corpbank, forensic firm estimates 20
Bulgaria’s M3 growth slows, domestic credit contraction deepens in March 21
Bulgaria’s deposit interest rates down m/m, lending rates mixed in March 22
Athens bourse applies to join regional platform SEE Link 22
Bulgaria reports current account surplus of €168.3mn in January-February 23
FDI in Bulgaria drops 83.4% y/y in January-February 24
Bulgaria’s foreign trade deficit narrows 76% y/y in Q1 25
Bulgaria’s gross external debt drops 12.8% y/y at end-February 25
Bulgaria's foreign reserves rise 1.3% in April 26
Bulgarian parliamentary committee fails to approve new anti-corruption bill 27
Bulgarian parliament approves plans for referendum initiated by popular TV show 28
Bulgaria’s ruling GERB rules out early elections as ABV quits government 29
Bulgarian president vetoes amendments to electoral code 30
Bulgarian parliament approves mandatory voting 31

Table 1 GDP, % y/y real (flash estimate) 8
Table 2 European Commission forecast for Bulgaria 9
Table 3 CPI, % y/y 10
Table 4 Domestic market PPI, % y/y 11
Table 5 Fiscal reserve, BGN mn 18
Table 6 Government debt, € mn 19
Table 7 Money supply, domestic credit, loans 22
Table 8 Current account, € mn 24
Table 9 Foreign trade, FOB/FOB, BGN mn 25
Table 10 Gross external debt, €mn 26

Figure 1 Consumer confidence indicator 6
Figure 2 Long-term convergence interest rate 7
Figure 3 GDP growth, % 8
Figure 4 Bulgaria CPI, % y/y 10
Figure 5 Domestic market PPI, % y/y 11
Figure 6 Industrial output 12
Figure 7 Construction output 13
Figure 8 Retail sales 14
Figure 9 Unemployment rate 15
Figure 10 Fiscal reserve, BGN mn 18
Figure 11 Government debt 19
Figure 12 Average interest rates on new euro loans 22
Figure 13 FDI in Bulgaria, € mn 24
Figure 14 Gross external debt, € mn 26
Figure 15 Foreign reserves 27

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