SOFIA (Bulgaria), November 13 (SeeNews) – Bulgaria's economy contracted by a preliminary 5.8% year-on-year in real terms in the third quarter of 2009, compared to a 6.8% growth recorded a year earlier, a flash estimate of the country's statistics office NSI indicated on Friday.
The country's third-quarter gross domestic product (GDP) totalled 17.778 billion levs ($13.531 billion/9.089 billion euro) in current prices, NSI said in a statement.
Bulgaria's economy contracted by a real 4.8% on the year in the first nine months of 2009, compared to a 7.0% growth in the same period of 2008. The country's nine-month GDP reached 48.061 billion levs.
Three analysts polled by SeeNews made the following comments on the NSI's flash estimate:
DIMITAR CHOBANOV, MACROECONOMIC ANALYST AT SOFIA-BASED THINK-TANK INSTITUTE FOR NEW ECONOMIC PROGRESS:
“I expected a similar development: acceleration of the drop from the previous quarter.
Still, there is a sector of the economy that is posting positive growth, although not a high growth: agriculture. However, here the reasons should be found in the poor crop last year and the more favourable weather conditions this year. This is a result of Nature being favourable, not of investments or more focused efforts to attracted capital to the farm sector.
The more unfavourable development is the first-ever drop in services, and especially having in mind that services have 60% weight in the value added, this drop leads the whole contraction.
The situation in industry has not changed significantly since the beginning of the year. Monthly data also indicated that the negative development will continue.
The positive news is the first-ever surplus in the trade balance. For the first time since 2004 exports exceed imports, which is due to the quite serious drop in imports mostly because of declining economic activity and output.
Another positive news is that GDP in nominal terms is still higher than it was last year which most probably will change as a trend by the end of the year."
MICHAL DYBULA, MACROECONOMIC ANALYST AT BNP PARIBAS, WARSAW:
“Frankly speaking, I even expected deeper contraction in the third quarter given that the economy is slowing down at a very rapid pace that can be judged by monthly data. But overall, if we are thinking about more than 5.5% year-on-year decline in GDP, this is OK. My estimate was for 6.8% annual decline.
But I don’t think that this is really that important having in mind what type of positive growth rate you were used to in the past.
What is currently taking shape is obviously the deterioration, the deepening of the economic contraction. On a number of reasons I guess, we will see further clinching of domestic demand and of investment activity but also in terms of consumption and the deterioration of the labour market situation is not inspiring for consumer spending.
And on top of that, we take on board the pledges of the government whose fiscal policy and tightened investments […] that obviously constitute a major drag on the aggregate demand.
AGATA URBANSKA, EMERGING EUROPE ECONOMIST AT ING BANK LONDON:
“I definitely was looking for deepening of the negative growth. I had minus 7.0%.
The bottom line is that Bulgaria is still to reach the bottom. We had a whole series of GDP releases – from Romania, the Czech Republic and Hungary, and everywhere third-quarter data was better than second quarter, to a different extent but it is one trend, everywhere, it was better.
Bulgaria in this sense is exceptional and this is because of the certain delay in responding to the crisis. Bulgaria is in a way less integrated, maybe in terms of trading with global economy, and so the slowdown that is happening is mostly driven by labour market changes.
Other markets were hit much stronger earlier by the financial market volatility or by bigger exposure to Eurozone whereas Bulgaria is kind of a relatively less open economy than the Czech Republic or Hungary in terms of exports to GDP [ratio]. It is not as exposed to financial market volatility as for example Romania or Hungary, so in the early stages it was more protected but now it is taking its toll.
It is just structural changes in the labour market and that is why the dynamic is different."