Current account gapwidened by 69.3% y/y to EUR 3.203bn (12% of GDP) in January-August. FDI grew by 21.7% y/y to EUR 3.396bn (12.7% of GDP) in the reported period
Foreign trade deficit worsened by 28.1% y/y to EUR 4.472bn (16.7% of GDP) in January-August
Gross external debt rose to EUR 22.003bn (82.3% of GDP) in July
1.3% inflation in September (13.1% y/y)
Industrial sales and output grewby 6.2% y/y and 7.3% y/y respectively in August
Retail sales growth slowed to real 3.7% in August
Household monetary income and expenditure increased by 22.3% y/y and 18.8% y/y respectively in August
Unemployment dropped to 6.78% as of end- September
General budget surplus widened by 44.4% y/yto BGN 2.84bn (5.5% of GDP) in January-August
Money supply growth accelerated to 30.4% y/y at the end of August. Domestic credit growth accelerated from 39.3% y/y as of end-July to 45.4% as of end-August
Loans extended to corporate clients and households increased by 54.6% y/y in August
12.88% is the average return provided by the universal pension funds for the past two years
Bulgarian stock indices hit new highs in September
I. EXTERNAL SECTOR
1. Balance of Payments
Current account gap widened by 69.3% y/y to EUR 3.203bn (12% of GDP) in January-August
According to Central Bank preliminary data, the current account gap widened by 85.3% y/y to EUR 160.7mn in August only and by 69.3% y/y to EUR 3.203bn in January-August. In relative terms the CA deficit represented 12% of the GDP, compared to 7.5% a year earlier.
The trade balance continued to be the main reason for the CA deterioration.
The services balance improved to EUR 1.332bn in January-August (from EUR 854.7mn a year earlier), thanks to the 17.8% y/y hike in receipts from tourism. At the same time, the net transfers and income continued to deteriorate.
However, the overall balance of payments continued to improve (by 73.4% y/y to EUR 1.646bn in January-August), on the back of strong financial inflows.
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 grew by 21.7% y/y to EUR 3.396bn (12.7% of GDP) in January-August
FDI inflows increased to EUR 3.396bn (12.7% of GDP) in January-August, compared to EUR 2.791bn (11.1% of GDP) a year earlier. Thus they covered 106% of current account deficit, versus 147.6% in the same period last year.
The attracted equity capital for January-August amounted to EUR 2.209bn (65% of total FDI), including EUR 18.6mn from privatisation deals. The reinvested earnings for the reported period are estimated to EUR 221.3mn.
By country, the largest investments in Bulgaria for the period concerned came from UK (12.5%), Austria (11.2%) and Belgium (9.4%).
At the same time the foreign investments abroad was EUR 108.7mn versus EUR 58.9mn a year earlier.
Foreign tradedeficit widened by 28.1% y/y to EUR 4.472bn (16.7% of GDP) in January- August
According to Central bank preliminary data, the foreign trade deficit widened by 11% y/y to EUR 579.5mn in August only and 28.1% y/y to EUR 4.472bn in January-August. In relative terms it accounted for 16.7% of GDP compared to 12.8% a year earlier.
Imports grew much faster than exports in January- August: 17.3% y/y versus 8.3% y/y, reaching EUR 13.001bn and EUR 8.529bn respectively. The data may undergo serious revisions in the favour of the trade balance with EU.
Foreign Trade (EUR mn) (chart)
2. External Debt
Gross external debt rose to EUR 22.003bn (82.3% of GDP) in July
The gross external debt roseby 22% y/y and 1.4% on a monthly basis to EUR 22.003bn at the end of July, accounting for 82.3% of projected fullyear GDP (71.9% a year earlier).
The short term liabilitiesrepresented 30.8% (EUR 6.770bn) of the total external debt, compared to 28.7% a year earlier. The servicing of the total debt as a percentage to GDP has expended by 2.2 pps y/y to 11.8%.
The public external debt shrank by 12.2% y/y to 4.060bn (15.2% of GDP) in July. On monthly basis however, it increased marginally by 0.5% (EUR 21.7mn).
Amounted EUR 17.942bn at the end of July, private external debt represented 81.5% of the total, which shows an increase of 7.1% as compared to the structure one year ago. External debt of the banks increased by 1% in July (to EUR 3.719bn), the foreign liabilities of commercial firms and the intra-company liabilities also grew - by 1.8% (to EUR 8.236bn) and 1.7% (to EUR 6.843bn) respectively. On annual base, the liabilities in the private sector to external lenders continue to rise at a very quick pace: 33.8% as of end-July.
Gross External Debt, EUR bn (chart)
II. REAL SECTOR
1. Inflation
1.3% inflation in September
According to NSI, consumer prices rose by 1.3% m/m in September after rising by 3.1% a month earlier. Inflation from the beginning of the year accelerated to 8.9%, while the year-on-year September inflation quickened to 13.1%.
Inflation in September was due to the rising food prices (2.1%), as drought and floods damaged crops earlier in the year. Catering and non-food prices also went up by 2.9% and 1.3% m/m respectively. Only services prices decreased (- 0.1% m/m).
The harmonised index of consumer prices (HICP), which takes uniform product weights for all EU members, accelerated at a slower pace of 1.2% m/m and 11% y/y in September due to the lower exposure of the index to food products.
Bulgaria’s government expects end-year inflation to be lower than 10% in 2007. Last month the IMF raised its forecast for Bulgaria’s 2007 end-inflation to around 8% from the earlier projected 4.4%.
Price Dynamics (Jan/05-Aug/07) (chart)
According to NSI data, producer prices inflation (PPI) on the domestic market accelerated to 9% y/y in August from 7.7% y/y in July. Prices of food supplies rose by 20.7%, pushed up by higher costs for purchase of agricultural inputs, and continue to be the main factor for the upward trend in producers’ prices. Electricity supply and mining industries also registered double-digit price hikes in August (12.3% and 14.3% y/y respectively), which would probably affect the prices of the related industries in the following months.
2. Industrial sales
Industrial sales and output grew by 6.2% y/y and 7.3% y/y respectively in August
Industrial sales growth slowed to real 6.2% in August from revised 12.6% y/y in July. Mining industries dropped by 19.6% y/y in August, while the manufacturing and utility firms posted weaker growth rats than in the previous months: 6.1% and 16.1% y/y respectively versus 12.4% and 21.2% y/y in July. A slowdown was registred in several export oriented branches suh as textile, clothing and metal processing etc.
Industrial production performed in a similar pattern to 7.3% y/y in August from 14.3% in July.
Industrial sales & Output, % y/y (chart)
3. Retail sales
Retail sales growth slowed to real 3.7% in August
According to NSI data, the retail sales growth slowed to real 3.7% in August from 5.8% in July. This is the eighth consecutive month of deceleration since records highs reached at the end of last year.
The wholesale trade in August remained at the same level as in the same period of the last year.
On monthly basethe retail and wholesales receipts marked an increase of 2.3% and 4.2% respectively.
The period average increase in retail and wholesale trade slowed to 7.8% and 2.5% y/y respectively in January-August.
4. Household Consumption
Household monetary income and expenditure increased by 22.3% y/y and 18.8% y/y respectively in August
In August the household monetary income and expenditure increased by 22.3% y/y and 18.8% respectively to BGN 607.58 and BGN 597.57.
Income from property, unemployment and other social benefits and other earnings were with increased weight in the household income structure, principally to the detriment of pensions and wages.
At the same time the payments for foods and nonalcoholic beverages; health and taxes are moving up on the expenditure side of the households' budgets principally to the detriment of housing, water, electricity, gas and other fuels.
5. Unemployment
Unemployment dropped to 6.78% as of end- September
Unemployment in Bulgaria continued to decrease through September and stood at 6.78%, down 0.22% m/m and 1.66% y/y. The strong economy growth and the schools hiring staff at the beginning of the school year contributed to the decline in the number of jobless people: by 19.7% y/y and by 3.16% m/m to 251 091.
The rate is only 0.08% higher than the EU level in August but suffers from big regional disparities: the unemployment dropped to 1.66% in Sofia, but the maximum unemployment registered in the country is 14.55%.
Unemployment (Dec/00-Sep/07) (chart)
III. FISCAL SECTOR
General budget surplus widened by 44.4% y/y to BGN 2.84bn (5.5% of GDP) in January- August
A surplus of BGN 2.64bn was booked in the republican budget in January-August, up 36% y/y.
Tax-revenues in the republican budget grew by 20.5% y/y in August due to the 24.8% y/y rise in direct taxes and 19.3% y/y - in indirect taxes. VAT receipts registered a 18.1% y/y increase in August due to higher import. The revenues of excise taxes also grew - by 34.4% y/y as a result of their hike. On the contrary, the duties revenues were reduced by 52.4% y/y in August, due to the adopted EU common customs tariff with third countries. The revenues from profit and income taxes grew respectively by 15.9% and 38.1% y/y, due to higher firm profit and lower unemployment. On the contrary the non-tax revenues dropped by 23.6% y/y due to lower property income.
Budgetary expenses marginally increased (2.2% y/y) in August due to higher transfers (+7.3%) and indexed salaries (+17.1%). All other expenditure items decreased.
Concerning the consolidated budget, the revenues grew much faster than the expenses in January-August: 17.4% y/y versus 9.2% y/y, reaching respectively BGN 15.2bn and BGN 12bn. That resulted into a surplus of BGN 2.84bn, up 44.4% y/y.
IV. MONETARY SECTOR
1. Monetary Aggregates
Money supply growth accelerated to 30.4% y/y at the end of August
According to Central Bank data, money supply (M3) growth accelerated to 30.4% y/y as of end- August from 29.1% y/y as of end-July. The fastest growing components were the overnight deposits in BGN (34.19%) and in foreign currency (49.11%) and the deposits with agreed maturity up to 2 years in foreign currency (34.15%). On monthly base, M3 increased by BGN 1.423bn (3.9%) to BGN 37.795bn. The share of foreign currency in M3 moved up to 38.15%.
Money Supply (M3) BGN mn, end-of-month (chart)
2. Domestic credit
Domestic credit growth accelerated from 39.3% y/y as of end-July to 45.4% as of end- August
Domestic credit growth accelerated from 39.3% y/y as at end-July to 45.4% as at end-August, according to Central Bank data. The stock of domestic credit reached BGN 27.532bn (EUR 14.077bn). Claims on government sector passed from – BGN 4.121bn as at end of July to - BGN 4.612bn a month later. credit to the nongovernment sector increased to BGN 31.350bn in August, its annual growth rate being 54.6% y/y compared to 49.4% y/y in July. It included BGN 19.013bn credits to non-financial corporations and BGN 12.026bn loans to households and NPISH, the both accelerating their growth rates to 57.9% and 50.2% y/y respectively in August compared to 54.7% and 41.7% y/y a month earlier.
In August the mortgage credits kept the same pace of growth as in the previous month: 79.4%, while the consumer and other loans accelerated to 36.4% and 17.9% respectively, versus 21.2% and 11.1% in July. On monthly base, the mortgage credits increased by BGN 213mn (4.6%) to BGN 4.883bn and represented 44.6% of all credits (except overdraft), compared to 37.4% a year earlier. The consumer loans grew by BGN 388mn (8.1%) to BGN 5.174bn in August, but their relative share shrunk from 52.1% to 47.2% in a year.
Domestic credit, % of GDP (table)
V. FINANCIAL SECTOR
Loans extended to corporate clients and households increased by 54.6% y/y in August
At the end of August, the total assets in the banking system increased to BGN 50.6bn. They marked an increase of BGN 2.113bn (4.4%) in the reported month and of BGN 13,308bn (35.7%) within the one-year horizon.
In August, gross loans and advances increased by BGN 2.089bn (5.4%), of which BGN 1.336bn being loans extended to corporate clients and households. Gross loans to enterprises and retail exposures mark a 4.4% m/m growth, and 54.6% y/y growth. The greatest monthly increase in absolute terms is reported in the exposures to credit institutions (BGN 743mn) and to enterprises (BGN 668 mn). A leading role in retail exposures during the month was played by consumer loans, which increased by BGN 439mn (7.6%). For the system as a whole, the quality of risk exposures marks no significant change and remains good.
The growth rate offinancial liabilities reported at amortized value is similar to the assets one. In August, the attracted funds increased by BGN 1.846bn (4.3%) up to BGN 44.4bn. This is significantly accounted for by the attracted funds from institutions other than credit ones, which marked a BGN 875mn (5.2%) growth in the month on the account of deposits received. The increase in the resources from credit institutions amounted to BGN 538mn (6.5%). Deposits from individuals and households increased at a lower growth rate – 2.6% (BGN 436mn), which reflects the impact of seasonal factors.
For the eight months of 2007, the banking sector has made a profit of BGN 744mn, by BGN 278mn (59.7%) higher than end-August 2006. The better financial result is primarily due to the increased net interest income and limiting administrative overheads.
The BNB apporoved an increase in the required reserves of the commercial banks held at the central bank by 4pps to 12% of deposits, effective as of September 1. The new measure results from the robust credit growth which raises the overall credit risk of the banking system in the conditions of falling interest rates due to the vigorous competition.
12.88% is the average return providedby the universal pension funds for the past two years
Average return provided at end-September by pension funds for the past two years were higher compared to end-June: 12.88% for universal funds, 13.75% for professional funds and 14.34% for voluntary funds versus 9.17%, 9.67% and 9.69% respectively.
There was no universal fund with yield of less than 10% at end-September. CCB-Sila was the record holder with 18.3% yield, followed by the two other companies of Chimimport – Saglasie and Lukoil – with 15.89% and 14.74% respectively. There was a record growth in the voluntary pension funds’ average net return with CCB-Sila moving up by 22.97%, followed closely by its main competitor – Badeshte – with 21.1%. The yields of the occupational funds vary between 10.66% (Allianz) and 17.66% (Saglasie). Doverie, Allianz Bulgaria and ING underperformed the market averages.
The FSC set a minimum annualized yieldof 7.73% on universal funds’ assets for the past 24 months and – 8.25% on occupational ones.
UPF CCB Sila exceeded the return cap set for the review period and has to allot funds to reserves.
The main driving force behind the yield growth of pension funds had been the legal amendment made in March 2006, which allowed these companies to invest in company stocks. Private pension funds already invested about one third of their assets in company stocks.
Bulgarian stock indices hit new highs in September
Positive expectations about the companies’ financial results in the third quarter and the large amount of free cash on the BSE lifted the indices to new highs in September. The SOFIX index of the 17 blue chips added 15% to 1849.69 points, while the broad BG-40 rose 28% to 538.42 points.
The market capitalization of Sofia Stock exchange increased by 13.3% m/m (and 148.7% y/y) to the record BGN 27.877bn (53.3% of GDP) in September. The monthly turnover of BGN 328mn was weaker than in the previous months.
SOFIX and BG-40: 01/02 - 30/09/2007 (chart)
*****
To view the original document, please click on the link below:
http://reports.aiidatapro.com/BBB/UBB/Bulletin_ENG_09.07.pdf
*****
Copyright: 2006 Obedinena Bulgarska Banka AD. All rights reserved. For further Information please contact UBB, 5 Sveta Sofia Str., 1040 Sofia, Bulgaria Tel. +359 2 811 29 80, fax: +359 2 988 08 22, e-mail: cekova_p@ubb.bg, web site: http://www.ubb.bg
*****
AII Data Processing does not endorse in any way, the views, opinions or recommendations expressed above. The use of the Information is subject to the terms and conditions as published by the original source, which you have to read and accept in full prior to the execution of any actions taken in reliance on Information contained herein.
 | SeeNews SeeNews is a business and financial news and information provider which brings its visitors and customers access to detailed coverage on the fast-growing companies, economies and markets of ten Southeast European nations. |
Search for: investments |
Search for: market |
Search for: assets |
Search for: share |
Search for: company |
Search for: index |
Search for: indices |
Search for: exchange |
Search for: chart |
Search for: credit |
Search for: sales |
Search for: Bulgaria |
Search for: institutions |
Bulletin ENG 09.07.pdf, 283 Kb
