UPDATE 3 - Bulgaria's 9-mo GDP Growth Accelerates to 7.0% Y/Y

The country's GDP reached 48,037.4 million levs ($33,046.1 million/24,561.1 million euro), calculated in current prices, through September, NSI said in a statement.

The Bulgarian economy grew by 6.8% in the third quarter, compared to 7.1% in the second quarter of 2008 and 4.9% in the third quarter of 2007.

The third-quarter and nine-month growth data exceed NSI's flash estimates released last month under which the country's economy grew by 5.6% in the third quarter and by 6.5% in the January-September period.

Released data also are well above analyst forecasts which saw third-quarter growth slowing down to 5.5% year-on-year.

"It is very impressive in a time when much of Europe has slowed down so sharply to have a growth of [..] 7.0% for the first nine months," IMF mission chief for Bulgaria, Bas Bakker, told a news conference.

In the first nine months of the year the industry accounted for 31.2% of the value added of the economy, which is a drop by two percentage points on the year, the NSI head of non-financial national accounts, Elena Atanasova, told a news conference.

The industry grew by a real 5.4%, she added. Services rose by a real 6.8%, raising their share in the gross value added to 60.4% through this September from 59.9% through September a year earlier. The farm sector output in the first nine months of 2008 increased by a real 24% as compared to the same period of 2007, she added.

"Global financial crisis had no significant (negative) impact on third-quarter growth, only a slight slow down is observable. However, it will have impact on the fourth-quarter figures," Peter Bilek, research fellow for southeast Europe with Hungary-based International Centre for Economic Growth (ICEG) European Centre, told SeeNews.

"On the production side, agriculture sector had a significant positive impact on the evolution of GDP via its 44% growth rate [in the third quarter] compared to the corresponding period of the previous year. However, it is unfavourable that [gross value added] GVA in industry increased by only 2%," Bilek said.

Domestic demand is still strong, said Bilek but added that the growth rate of imports decreased significantly, from a double digit figure to less than 5.0%, which reflects the forthcoming decrease of the growth rate of domestic demand.

Bilek sees the country's full-year economic growth slowing to 6.0% due to the lower GDP growth in the last quarter. GDP could reach 4.0-5.0% as high external imbalances and the global financial crisis with its future impacts are the main uncertainties and risks to growth, Bilek said.

A growth of 6.8% for the year's third quarter is "much more than expected and this means there is no crisis in Bulgaria yet," state-run news agency BTA quoted Deputy Economy Minister Yavor Kuyumdzhiev as telling reporters.

"The economy is working perfectly and has never performed so good," BTA quoted Kuyumdzhiev as saying.

Kuyumdzhiev expects Bulgaria's economic growth to be some 5.0% next year, the news agency reported.

In 2007, the country's GDP grew by 6.2% in real terms, a bit slower than the 6.3% rise recorded in 2006.

The government in Sofia expects that the growth of the country's economy will slow down in the coming years hit by the global financial and economic turbulences. The government sees the country's economy growing by a real 6.5% in 2008.