August 17 (SeeNews) - Bulgaria's gross domestic product (GDP) contracted by a real 4.2% on the year in the first half of 2009, compared to a 7.1% growth recorded a year earlier, flash estimates from the National Statistics Office (NSI) indicated on Monday.
In the second quarter alone the GDP contracted by 4.8% on the year, compared to a 7.1% growth a year earlier, NSI said in a statement.
“My GDP estimations for the second quarter were for a contraction of around 4.0% on the year, slightly lower than the figures released today. So I was more optimistic, I did not shared other analysts' projections for a contraction of more than 6.0%,” Lachezar Bogdanov, an economist with Sofia-based independent think-tank Industry Watch, told SeeNews.
Three analysts polled by SeeNews ahead of the flash estimate's release on Monday said that the GDP would contact by 5.8%-7.1% in the second quarter.
Bogdanov said that the main reason for the GDP contraction is the fall of investments and consumption. Difficult access to capital and financing leads to many big investment projects being frozen or postponed, he added.
"On the other hand Bulgaria experiences also positive effects from the global crisis. The signals of the global economy sharply force certain companies and sectors to adapt to the new reality. We have very serious differences in the slowdown of several sectors. This means that what happens now is an unsound but eventually healthy adaptation of part of the businesses that in the last few years have experienced an unhealthy boom. I mean the constructions and the real estate,” Bogdanov said.
Industry contributed 28.7% of GDP in the second quarter of 2009, while the services sector - 65.1%, NSI data showed. In the same quarter a year earlier the industrial sector contributed 26%, the agricultural sector - 6.3% and services - 49.2%.
Bogdanov said he expects the GDP to show a slight positive growth in the fourth quarter, unlike Agata Urbanska, an emerging Europe economist at ING Bank London and Toth Gyula, an Eastern Europe economist at CAIB/Bank Austria who said earlier this month that in the fourth quarter the growth will be still negative, despite some expected improvements.
“I believe there will be a slight improvement in the fourth quarter, at least because in the fourth quarter last year, when we felt the first signs of the global crisis, we had a very low base. For the end-year I expect the situation to be better than the figures for the first half of the year, or better than minus 4.2%,” Bogdanov said.
Bulgaria’s economy grew by a real 3.5% in the fourth quarter of 2008, after growing by 6.8% in the third quarter, but sharply contracted by 3.5% in the first quarter of 2009.
The year-on-year GDP drop in the second-quarter this year is mostly due to a 9.8% annual drop in the value added in the industrial sector, NSI said. Value added in the services sector rose in the second quarter by 0.3% compared to the same period a year ago, while in the agricultural sector it fell by 6.6%, the statement said.
The government of Prime Minister Boiko Borissov, which took office on July 27, expects the economy to contract by 6.3% this year. Finance Minister Simeon Dyankov said earlier this month he sees the economy contracting by 2.0% next year, but expanding by 8.0% in 2011-2012.
The International Monetary Fund revised in July its economic growth forecast for Bulgaria to minus 7.0% in 2009 and minus 2.5% in 2010.
BULGARIA'S GROSS DOMESTIC PRODUCT:
|GDP real growth (y/y pct change)
|GDP (mln levs)
|-Gross Capital Formation
Bulgaria’s economy grew by a real 6.0% in 2008, slower than the 6.2% growth posted a year earlier.
(1 euro = 1.95583 Bulgarian levs)