Country Report Bulgaria March 2009

Outlook for 2009-10

• Citizens for European Development of Bulgaria (CEDB), the main opposition party, looks set to lead the government after the election due in mid-2009.
• A CEDB-led government is unlikely to make any radical changes in economic policy, but will try to crack down on organised crime and corruption.
• The EU will keep Bulgaria under close scrutiny, continuing to demand judicial reforms, and more tangible results in the fight against corruption and organised crime.
• Real GDP growth is forecast to slow from an estimated 6% in 2008 to -1.9% in 2009, mainly because of the worsening outlook for access to finance. Risks remain of an even sharper contraction if global conditions deteriorate further.
• Growth is forecast to rebound mildly, to 1.1%, in 2010.
• Headline inflation will continue to trend down from the high rates seen in 2008 as domestic demand pressures ease and owing to lower world oil prices. Inflation is forecast to average 4.8% in 2009 and 4.1% in 2010.
• Owing to the expected significant slowdown in the growth of domestic demand, the Economist Intelligence Unit forecasts that the current-account deficit will narrow to 13.5% of GDP in 2009 and 10.1% of GDP in 2010.

Monthly review

• The National Movement for Stability and Progress (NMSP), a member of the ruling coalition, argued that a precautionary agreement with the IMF would improve investor confidence in Bulgaria.
• A poll by the National Centre for Public Opinion Research indicated that the CEDB has a 24% share of electoral support, compared with 19% for the Bulgarian Socialist Party (BSP), a member of the ruling coalition.
• Despite increased spending at the end of 2008 and slower GDP growth in the fourth quarter, the government achieved the budget surplus target of 3% ofGDP.
• The government presented an anti-crisis plan, but overall the plan does not offer much new and was mostly outlined earlier in the budget for 2009.
• Total gross bank credit increased in December by around Lv280m (US$211m), which is by far the lowest amount in the past two years.
• Preliminary data for the fourth quarter of 2008 indicate that real GDP grew by 3.6% year on year, compared with 7% for January-September.
• In 2008 the current account deficit reached 8.3bn (US$12.1bn), which equates to 24.4% of estimated full-year GDP, up from 6.3bn, or 22% of GDP, in 2007.

Source: Country Report

This report covers the following industry codes:
SIC Code: 60
NAICS Code: 52