November 27 (SeeNews) - Bulgaria's economy is expected to contract by 1.0% in 2010 even though it should start recovering from the global crisis in the second half of the year, the Bulgarian a unit of French credit insurance agency Coface forecast on Friday.
The country will feel the peak of the crisis in the last quarter of 2009 and the first quarter of next year and then it will show the first signs of recovery in the middle of 2010, Kamelia Popova, manager of Coface Bulgaria, said at the Bulgaria 2009 - 2013 Economic Visions for European Development conference, held by the Bulgarian Economic Forum (http://www.biforum.org).
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 gross domestic product (GDP) reached 48.061 billion levs.
The country's economic growth will be zero or 0.5% next year under an optimistic scenario, while a 2.0% contraction can be expected under a pessimistic scenario, central bank governor Ivan Iskrov said earlier.
Although the economy will start stabilising in the second half of 2010, it will continue to feel the effects of the crisis for two more years, with the jobless rate remaining high and the real estate prices still recovering, Popova also said.
Bulgaria's jobless rate rose to 8.23% at the end of October from 8.03% in September and 5.85% in October 2008. Bulgaria's unemployment rate is expected to reach 9.2%-9.3% by the end of the year, Labour Minister Totyu Mladenov said earlier this month. The jobless rate is expected to rise further to 11.4% next year. The government has said it plans to spend around 1.0 billion levs ($7.6 million/5.1 million euro) to fight rising unemployment.
According to industry experts, Bulgarian real estate and construction sector should start recovering in 2011 at the earliest. The Bulgarian real estate market thrived between 2003 ad 2007 with local and foreign investors drawn by expectations for high yields after the country's accession into the European Union in 2007. The global financial crisis, however, has cooled down the speculative mood in the market and has led to portfolio restructurings.
The Bulgarian construction sector was one of the main engines of the country's economic growth of some 6.0% in each of the past few years. Constructions, together with the real estate and the financial services sectors, generated together around 55% of Bulgaria's GDP in each of 2006 and 2007.
Popova also said that, as a result of the crisis, the inter-company indebtedness is expected to rise by 50% by the end of the year compared to 2008. The liabilities between companies rose by 32% year-on-year in the first half of 2009.
The companies that are the most endangered due to the crisis this year are the ones operating in sectors with traditionally higher level of bankruptcy risk - agriculture, construction and transport. However, new sectors were also hit, including media, tourism, and retail of heavy machines, as as some of the companies went bankrupt, Popova said.
She added that as of September, the number of bankruptcy procedures in Bulgaria rose by 141% on the year.
(1 euro=1.95583 Bulgarian levs)