Country Report Bulgaria October 2009

Summary

After gaining 116 of 240 seats in the parliamentary election in July, the centre-right Citizens for European Development of Bulgaria (CEDB) will govern alone, despite lacking a majority. This presents some risk to political stability.
The EU will keep Bulgaria under close scrutiny, continuing to demand judicial reform, and results from efforts to combat corruption and crime.
Given its large external debt and current-account deficit, there is an ongoing risk that Bulgaria will require some financial assistance from the IMF and the? EU.
Real GDP is estimated to contract by 5.3% in 2009, mainly because of limited external finance and the poor economic outlook for the euro zone.
Growth is forecast to rebound weakly, to 1%, in 2010, before trending up to 3.4% in 2011 as both private consumption and investment begin to grow again more strongly.
Inflation is estimated to average 2.7% in 2009 and forecast to average 2.4% in 2010-11 as world oil prices remain relatively low and domestic demand recovers only slowly from the economic crisis.
Owing to a sharp contraction in domestic demand, we estimate that the current-account deficit diminished from 25.2% of GDP in 2008 to 12.3% of GDP in 2009, and forecast that it will trend down to 7.8% in 2011.

In September relations between Georgi Purvanov, the president, and Boiko Borisov, the prime minister, soured amid mutual criticism.
The justice minister, Margarita Popova, outlined 57 measures to reform the? judiciary.
In August, according to preliminary data announced by the Ministry of Finance, the monthly deficit in the state budget was Lv105m (US$76.6m), which is the best monthly budget performance since April.
The government's fiscal framework for 2010-13 targets a balanced state budget (excluding EU funds) for the period as a whole.
Year-on-year growth rates for high-frequency indicators of economic activity such as industrial production and retail sales remained subdued in June-July.
Consumer prices dropped by 0.2% month on month in August, bringing the year-on-year rate of inflation down from 1.6% in July to 1.3%.
In July the current account posted a monthly surplus of ???102m (US$139m), but the overall balance of payments still recorded a monthly deficit.

Source: Country Report

This report covers the following industry codes:
SIC Code: 53;37
NAICS Code: 44;336