EXECUTIVE SUMMARY 4 MACROECONOMIC OVERVIEW 5 Bulgaria needs economic, structural reforms, ECB says 5 EC recommends fiscal adjustment, finalising of bank stress tests in Bulgaria 5 S&P affirms Bulgaria’s ratings at BB+/B with stable outlook 6 Fitch affirms Bulgaria at BBB- with stable outlook 7 Bulgaria's long-term convergence interest rate declines to 2.37% in May 7 REAL SECTOR 8 1. GDP 8 Bulgaria’s Q1 GDP growth confirmed at 2.9% y/y 8 World Bank keeps Bulgaria's 2016 GDP growth forecast at 2.2% 9 2. Inflation 9 Bulgaria’s CPI deflation eases to 2% y/y in May 9 Bulgaria’s annual PPI deflation stays at 4.1% in April 10 Bulgaria's agricultural producer prices drop 5% y/y in Q1 11 3. Industry and Trade 11 Bulgaria’s business climate improves in May 11 Bulgaria’s industrial production growth slows to 2.5% y/y in April 12 Bulgaria’s construction output decline worsens to 10.4% y/y in April 12 Bulgaria's retail sales growth decelerates to 5.4% y/y in April 13 4. Labour Market 14 Bulgaria's unemployment rate drops to 8.7% in May, labour agency says 14 5. Tourism 14 Bulgaria’s accommodation revenue rises 12.1% y/y in April 14 Foreign tourists in Bulgaria up 41.5% y/y in April 14 FISCAL SECTOR 15 Bulgaria reports budget surplus of 3% of GDP in January-May 15 Bulgaria launches concession tender for Sofia Airport 16 Bulgarian parliament approves €1.2bn army modernisation 16 Bulgaria’s parliament adopts legislation on financial recovery of municipalities 17 Bulgaria’s fiscal reserve rises 3.8% in April 17 Bulgaria’s government debt rises 8.9% y/y at end-April 18 FINANCIAL INTERMEDIATION 19 Bulgarian banking sector profit rises 17.3% y/y in January-April 19 Fitch affirms three Bulgarian banks, one leasing company 19 Belgrade court approves extradition of Corpbank majority shareholder to Bulgaria 19 Bulgaria’s central bank approves acquisition of TBI Bank 20 Bulgaria’s M3 growth speeds up, domestic credit contraction narrows in April 21 Bulgaria’s deposit interest rates mostly up m/m, lending rates mixed in April 22 Assets of Bulgarian resident investment funds drop 6.9% y/y to €408.9mn at end-March 22 EXTERNAL SECTOR 23 Bulgaria’s current account surplus widens 62.7% y/y in Q1 23 FDI in Bulgaria drops 36.6% y/y in Q1 24 Bulgaria’s 4-mo foreign trade deficit narrows 72.6% y/y 25 Bulgaria’s gross external debt drops 11.7% y/y at end-March 25 Bulgaria's foreign reserves rise 0.5% in May 26 POLITICS 27 Bulgarian deputy transport minister resigns after being charged over 2007 case 27 Bulgarian President Plevneliev says will not run for second term in 2016 elections 28 Bulgarian parliament rejects presidential veto on electoral code amendments 28
This report covers the key macroeconomic, financial and political releases for Bulgaria for the period since May 17, 2016.
The country’s economy expanded by 2.9% y/y in Q1, the statistics office said on June 7, confirming its flash estimate. The World Bank has left unchanged its 2016 GDP growth forecast for Bulgaria at 2.2%, the latest edition of the bank's Global Economic Prospects report showed.
S&P Global Ratings said on June 3 that it has affirmed its BB+/B long- and short-term foreign and local currency sovereign credit ratings on Bulgaria with a stable outlook. Also on June 3, Fitch Ratings has affirmed Bulgaria's long-term foreign and local currency Issuer Default Ratings (IDR) at BBB- and BBB, respectively, with stable outlooks.
Bulgaria's business confidence improved m/m in May. The industrial production growth cooled to 2.5% y/y in April from 2.6% y/y in March. The construction output fell 10.4% y/y in April, deteriorating from an 8.8% y/y decrease the month before. Retail sales (at constant prices) climbed 5.4% y/y in April, slowing down from a 6.3% y/y increase in March.
The CPI decreased by 2% y/y in May, after dropping by 2.2% y/y in April
Bulgaria reported a consolidated budget surplus of BGN2.68bn (€1.37bn) in January-May, equal to some 3% of projected GDP, preliminary data from the finance ministry showed
The country reported a current account surplus of €185.1mn in the first quarter of 2016, up from a surplus of €113.7mn Q1 2015