Current account gap widened by 46.5% y/y to EUR 2.136bn (8% of GDP) in January-April. FDI in Bulgaria stood at EUR 1.154bn (4.3% of GDP) in the reported period
Foreign trade deficit worsened by 48.9% y/y to EUR 2.073bn (7.8% of GDP) in January-April
Gross external debt increased to EUR 20.294bn (75.9% of GDP) in March
GDP rose by 6.2% y/y in Q1
0.1% inflation in May (4.3% y/y)
Industrial sales and output grew by 9.7% y/y and 11.2% y/y respectively in April
Retail and wholesales trade grew by 7.4% y/y and 4.6% y/y respectively in April
Household monetary expenditure and income increased by 26.5% y/y and 19.4% y/y respectively in April
Unemployment dropped by 1.77% y/y to 7.82% as of end-May
General budget surplus widened by 45% y/y to BGN 1.3bn (2.4% of GDP) in January-April
Money supply growth accelerated to 29.5% y/y at the end of April. Domestic credit growth accelerated from 26.2% y/y as of end-March to 28.7% as of end- April
Loans extended to corporate clients and households increased by 38.9% y/y in April
Insurance market grew 14% y/y to nearly BGN 360mn in Q1
ipo auctions sparked trade on BSE in May
I. EXTERNAL SECTOR
1. Balance of Payments
Current account gap widened by 46.5% y/y to EUR 2.136bn (8% of GDP) in January-April
According to Central Bank preliminary data, the current account gap widened by 45.8% y/y to EUR 531.4mn in April and by 46.5% y/y to EUR 2.136bn in January-April. In relative terms the CA deficit represented 8% of the GDP at end-April, compared to 5.8% a year earlier.
The trade balance continued to be the main reason for the CA deterioration.
However the overall balance of payments remained on a surplus of EUR 479mn, rising about 6 times y/y, due to large inflow booked in net currency and deposits in the financial account.
BNB warns that the CA data may undergo serious revisions due to the problems met with the foreign trade data collection after Bulgaria’s EU entry.
Finance minister estimated that the CA deficit is likely to reach 18% of GDP this year, against initial expectations in the range of 15-16%.
Balance of Payments Flows (EUR mn) (chart)
FDI in Bulgaria stood at EUR 1.154bn (4.3% of GDP) in January-April
FDI inflows decreased to EUR 1.154bn (4.3% of GDP) in January-April, compared to EUR 1.159bn (4.6% of GDP) a year earlier. Thus they covered only 54% of current account deficit, versus 79.5% in the same period last year.
The attracted equity capital for January-April amounted to EUR 800mn (69.3% of total FDI), including EUR 1.4mn from privatisation deals. The reinvested earnings for the reported period are estimated to EUR 109.7mn.
The largest investments came from UK (15.8%), Austria (10.8%) and Luxembourg (8.7%).
At the same time the foreign investments abroad was EUR 39.4mn versus EUR 23.3mn for the same period last year.
Foreign trade deficit widened by 48.9% y/y to EUR 2.073bn (7.8% of GDP) in January-April According to Central bank preliminary data, the foreign trade deficit widened by 44.1% y/y to EUR 487.5mn in April and 48.9% y/y to EUR 2.073bn in January-April. In relative terms it accounted for 7.8% of GDP compared to 5.5% a year earlier.
Imports grew much faster than exports in January- April: 17.3% y/y against 5.3% y/y. The data may undergo serious revisions in the favour of the trade balance with EU.
Foreign Trade (EUR mn) (chart)
2. External Debt
The gross external debt increased to EUR 20.294bn (75.9% of GDP) in March
The gross external debt increased by 26% y/y (EUR 4.182bn) to EUR 20.294bn as of the end of March, accounting for 75.9% of projected full-year GDP (compared to 64.2% a year earlier). On monthly base, the debt increased by 1.9% (EUR 370.9mn).
The short term liabilities represented 31.8% (EUR 6.461bn) of the total external debt, compared to 28% a year earlier.
The external public debt decreased by EUR 20mn (0.5%) in March and by EUR 504.5mn (10.6%) y/y and stood at 4.242bn. Further reduction in the state debt will be in April, as the Ministry of Finance prepaid the whole outstanding debt of SDR 204.8mn (EUR 230mn) to the IMF.
Amounted EUR 16.052bn at the end of March, private external debt represented 79.1% of the total, which shows an increase of 8.6% as compared to the structure one year ago. External debt of the banks increased the most in March (EUR 186mn; 5.7%), followed by the foreign liabilities of commercial firms (EUR 142mn; 1.9%) and the intra-company liabilities (EUR 69.4mn; 1.2%). On annual base, the liabilities in the private sector to external lenders continue to rise at a very quick pace: 41.2% as of end-March.
Gross External Debt, EUR bn (chart)
II. REAL SECTOR
1. Gross Domestic Product (GDP)
GDP rose by 6.2% y/y in Q1
GDP rose by 6.2% y/y in Q1 to BGN 11.5bn (EUR 5.9bn) accelerating from 5.7% y/y in the previous quarter. The rebound was driven by private consumption and investments. The annual GDP growth for 2007 is expected to exceed 5.8%.
The gross value added generated by the national economy in Q1 stood at BGN 9.4bn, up by 4.4% y/y. The industrial sector increased its share to 33.5%, while services lost 1% to 61.8% and agricultural sector’s contribution to the economy fell by 0.3% to 4.7%. The changes in the structure were due to 7.6% and 8.1% increase of value added respectively in industry and services. The value added in the agricultural sector grew at a modest rate of 2.5%, but it was still an important contribution in view of the steep decline in previous years.
On the expenditure side, the investments became the major growth factor, accelerating to record high 35.9% y/y in Q1 from 23.8% y/y in the previous quarter. Private consumption rose by 8.1% compared to 5.9% in Q4 last year. Imports have surged at a faster rate than exports: 13.2% against 2.2%.
GDP (table)
2. Inflation
0.1% inflation in May
According to NSI, consumer prices rose by 0.1% m/m in May. Inflation from the beginning of the year quickened to 2.4% and year-on-year May inflation – to 4.3%.
In May food prices fell by 0.6% m/m, the vegetable reporting the biggest depreciation (of 19.2%). At the same time non-food prices grew by 0.6% m/m, the fuel increase contributing the most. Catering and services also went up respectively by 0.7% and 0.3% m/m.
The EU-harmonized monthly consumer price index (HICP) rose by 0.3% in May and the annual one reached 4.5%.
The government expects inflation to slow down to 3.4% this year, while the IMF has projected and end-year inflation of under 4.5%.
Price Dynamics (Jan/02-May/07) (chart)
According to NSI data, producer prices inflation (PPI) on the domestic market accelerated to 7.9% y/y in April from 7.8% y/y in March, due to the manufacturing prices (6% hike compared to 5.3% in March). The food prices increasing by 10% in April would impact the consumer prices. Prices of metal mining as well as electricity supply continued to rise at double-digit but decelerating pace: 27.7% and 10.4% y/y respectively in April, compared to 38.2% and 10.5% y/y in March.
3. Industrial sales
Industrial sales and output grew by 9.7 % y/y and 11.2% y/y respectively in April
In April the industrial sales growth stood unchanged from revised 9.7% y/y in March, reflecting a strong rebound in mining (from – 20.6% y/y in March to 28.1% y/y in April) and state regulated energy supplies (from – 8.3% to 13.9% y/y), offset by weaker performance in manufacturing: 9.2% y/y growth in April versus 13.5% in March. A number of industries showed a deceleration in the sales: manufacture of food products and beverages, textiles, luggage, chemical products, other non-metallic mineral products, machinery and equipment, office machinery and computers.
Industrial production growth accelerated to 11.2% y/y in April from revised 9% y/y in March.
Industrial sales & Output, % y/y (chart)
4. Retail sales
Retail sales growth decelerated to 7.4% y/y in April
According to NSI data, the retail trade grew by real 7.4% y/y in April decelerating from 13.4% y/y in March.
The wholesale trade also decelerated in April - to 4.6% y/y from 5.2% y/y in March.
On monthly base the retail receipts marked a marginal 0.7% increase, while the wholesales ones dropped by 0.4%.
The period average increase in retail and wholesale trade was reported at real 10.6% and 4.2% y/y respectively in January-April.
5. Household Consumption
Household monetary expenditure and income increased by 26.5% y/y and 19.4% y/y respectively in April
In April the growth of household monetary expenditure overpaced the income one: 26.5% y/y versus 19.4% and reached respectively BGN 556.19 and BGN 567.58.
Income from property and property sale, wages and other earnings were with increased weight in the household income structure, principally to the detriment of pensions.
At the same time the payments for foods, beverages and tobacco; housing, water, electricity, gas and other fuels; and communications are moving down on the expenditure side of the households' budgets in favor to the other items.
6. Unemployment
Unemployment reached 7.82% as of end-May According to the National Employment Agency, unemployment rate fell to 7.82% in May, the lowest figure registered since July 1991. The May rate is down 0.55% from April and 1.77% from 2006.
Seasonal employment characteristic for this time of the year and the considerable number of people who took jobs contributed to the downward trend of unemployment.
A total of 19 657 people started work in May, down from 27 930 in April.
Unemployment (Dec/00-May/07) (chart)
III. FISCAL SECTOR
The general budget surplus widened by 45% y/y to BGN 1.3bn (2.4% of GDP) in January- April
In January – April a surplus of BGN 1.1bn was booked in the republican budget, up 12.2% y/y.
All taxes, excepting the duties, contributed to 35.2% y/y growth in tax revenues in April. Despite the profit tax reduction from 15% to 10% as of the beginning of the year and the small decrease in the personal income tax burden, the revenues from profit and income taxes grew respectively by 72.8% and 39.2% y/y, due to higher firm profit and lower unemployment in 2006. The delay in the VAT collection, due to its new regime, was recovered and the VAT receipts recorded even a 24.7% y/y increase in April. The revenues of excise taxes also grew - by 59.4% y/y, as a result both of their hike and more goods, subject to taxation. On the contrary, the duties revenues were reduced by 68.7% y/y in April, due to the adopted EU common customs tariff with third countries.
Budgetary expenses were (by 1.6%) under their level of April 2006, principally due to the 10.3% drop in the transfers. The contribution to the EU budget was BGN 38.6mn in April.
Concerning the consolidated budget, the revenues grew faster than the expenses in January - April: 17.6% y/y versus 8.9% y/y, reaching respectively BGN 7.26bn and BGN 5.77bn. That resulted into a surplus of BGN 1.27bn, up 45.4% y/y.
IV. MONETARY SECTOR
Since January 2007 BNB published the monetary statistics only monthly with a month delay.
1. Monetary Aggregates
Money supply growth accelerated to 29.5% y/y at the end of April
According to Central Bank data, money supply (M3) growth accelerated to 29.5% y/y as of end- April from 28.2% y/y as of end-March, principally due to the faster pace of overnight deposits in BGN (42.6%) and in foreign currency (42.3%), and term-deposits in foreign currency up to 2 years (32.9%). On monthly base, M3 increased by BGN 624mn (1.9%) to BGN 33.379bn. The share of foreign currency in M3 moved down to 37.65%.
Money Supply (M3) BGN mn, end-of-month (chart)
2. Domestic credit
Domestic credit growth accelerated from 26.2% y/y as of end-March to 28.7% as of end- April
Domestic credit growth accelerated from 26.2% y/y as at end-March to 28.7% as at end-April, according to Central Bank data. The stock of domestic credit reached BGN 24.407bn (EUR 12.478bn). Claims on government sector passed from - BGN 2.072bn as at end of March to - BGN 2.680bn a month later. credit to the nongovernment sector increased to BGN 26.376bn in April, its annual growth rate being 39.4% y/y compared to 36.7% y/y in March. It included BGN 15.938bn credits to non-financial corporations and BGN 10.182bn loans to households and NPISH, the both accelerated from 36.3% to 39.9% y/y and from 37.6% to 38.8% y/y respectively in April.
Mortgage credits growth accelerated from 74.5% y/y in March to 75.8% y/y in April and the consumer ones – from 14.8% to 15.6% y/y. On monthly base, the former increased by BGN 186.9mn (4.9%) to BGN 3.999bn and represented 43% of all credits (except overdraft), compared to 33.6% a year earlier. The consumer loans grew by BGN 142.7mn (3.4%) to BGN 4.360bn in April, but their relative share shrunk from 55.9% to 47% in a year.
Domestic credit, % of GDP (table)
V. FINANCIAL SECTOR
Loans extended to corporate clients and households increased by 38.9% y/y in April
At the end of April the total assets of the banking system were BGN 44.313bn (84.8% of GDP), which is by BGN 205 mn (0.5%) less relative to March. This drop was also partly induced by the merger of Bulbank, HVB Bank Biochim and Hebros Bank into UniCredit Bulbank as of 27 April 2007. On an annual basis the growth of the system assets is BGN 9.937bn (28.9%).
A monthly decline is registered in loans and receivables (including financial leasing) in April – BGN 226 mn (0.7%) to BGN 32.917bn. The gross amount of loans to corporate clients and individuals is BGN 26.493bn at the end of the reported period. Their volume is up by BGN 1.130 bn (4.5%) against March, and - by 38.9% (BGN 7.421bn) within a year.
At the end of April the financial liabilities, measured at amortised cost, register a decline by BGN 128 mn (0.3%) to BGN 39.012bn, which is mostly contributed by the reduction in deposits from credit institutions. At the same time, deposits of institutions other than credit institutions increase by BGN 428mn to BGN 30.290bn. Attracted funds from individuals and households are BGN 15.519bn, or by BGN 275mn more compared to the previous month.
The aggregated net profit of the commercial banks rose by 16.4% y/y to BGN 305mn in January-April.
From 1 January 2007, the BNB introduced a new consolidated financial reporting framework, applicable to the EU credit institutions. The credit portfolio includes both banks and non-banks.
Insurance market grew 14% y/y to nearly BGN 360mn in Q1
In Q1 2007 the premium income of general insurers increased by 12.6% to BGN 305.6mn (EUR 156mn).
The first 3 insurance companies accounted for almost 50% of the premium income of the general insurance sector in Bulgaria: TBI – Bulstrad dominated the market with a market share of 19.5%, closely followed by Allianz and DZI with respectively 14.75% and 14.74%.
Automobile insurance generated 65.8% of total revenues and 86.2% of all compensations in Q1 2007, which reached BGN 93.8mn (EUR 47.9mn). The aircraft and railroad vehicles insurance segments registered the most robust growth in Q1 2007, generating 50% higher premium income compared to Q1 2006. The comprehensive car insurance, general third-party liability and fire and natural perils insurance segments rose by 37.7%, 25.4% and 10.5% y/y respectively, while third party liability related to the possession and use of motor vehicles, including Green cards, and property damage insurance dropped by 8.4% and 8.1% respectively.
The Bulgarian life insurance market registered a premium income of BGN 53.05mn (EUR 27mn) in Q1 2007, up more than 23% y/y, according to the FSC data.
Allianz held the largest share of some one-third (26.18%) of the life insurance market, followed closely by DZI with 21.25%. Uniqa ranked third with 15.82% of the market.
Life and rent insurance accounts for the largest share of both the premium income (76.3%) and the amounts and benefits paid (63.5%). Accident (49.3%), life (37.2%) and marriage and child insurances (33.8%) showed the largest growth of premium income on an annual basis, while rent and supplementary insurances marked a decrease of 25.3% and 19.8% respectively.
Revenues from health insurance premiums remained almost unchanged on a yearly basis, marking a marginal 0.8% increase to BGN 11.1mn (EUR 5.7mn). The oldest private fund – Generali- Zakrila accounted for 47.2% of the total premium income in Q1 2007 (compared to 74.8% a year earlier), followed by Medico – 21 with a market share of 20.4% (8.3% a year earlier). In the structure of premium income, the out-of-hospital care came first with 19.9%, followed by stomatological services (12.7%) and hospital care (11.6%).
ipo auctions sparked trade on BSE in May
The market capitalization of Sofia Stock exchange increased by 5.7% to BGN 18.747bn (or 35.9% of GDP) in May. The realized turnover of BGN 665mn was the second best in the history of BSESofia (after that of December).
The IPOs of FIBank and Corporate Commercial Bank stirred the Bulgarian capital market. As soon as it emerged that Corporate Commercial bank’s issue was oversubscribed 14-fold, the SOFIX and BG-40 indexes started picking up. The upward trend may be put down to the financial resources released by the auction which were redirected to other stocks. As a result, the BG-40 hit a series of all-time highs.
FIBank’s issue was oversubscribed nearly 6-fold.
SOFIX and BG-40: 01/02/2007 - 31/05/2007 (chart)
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Bulletin ENG 05.07.pdf, 323 Kb
