Friday, 11 December 2009

Spring Turnaround In The Bulgarian Ecomony Predicted

It is indeed going to be a hard winter for Bulgaria with the worse still to come in the recession. I see it all around me, shops closing unemployment widespread with many of my family and friends here. Spring can’t come too soon here. At least a recession doesn’t affect growing and producing your own food, which feeds you throughout the winter. Without this Bulgaria would have sunk many decades ago.

Spring Turnaround In The Bulgarian Ecomony Predicted

Bulgaria's economy will hit bottom in the current quarter or in the first three months of 2010, analysts of Economist Intelligence Unit forecast. The data were announced at the eighth roundtable with the Bulgarian government, organised by Economist Conferences.

Exports to the EU and Turkey and unfreezing of financing are the factors that will take Bulgaria back on track to growth, Richard Eames, conferences programme director CEMEA, said. Bulgaria's economic performance since the beginning of the crisis differs from that of other EU countries in that slump has been very rapid in the past two quarters. Therefore we think the bottom will be hit by this year's end or in the first quarter of 2010 at the latest, Eames explained.

Besides prospects for recovery, Economist's analysts also see serious risks to Bulgaria's economy. The big foreign debt may force Bulgaria to seek financing from the International Monetary Fund or the European Central Bank. The bulk of it, however, is private debt. Therefore Bulgarian National Bank deputy governor Kalin Hristov believes the concerns that Bulgaria may need external financing are ungrounded. The big private debt does not jeopardise the currency board system.

The Economist's report forecasts a rise in government debt to 21.3% of GDP at the end of 2009 and a level of 24% in 2010. According to official data of the finance ministry, currently the government debt is 14.65% of GDP. That means that analysts expect state debts to rise substantially in the last quarter of the year.

Unemployment increasing faster than payment affects consumption, which is crucial for steady economic growth, the analysts say. A drop in consumption was reported by business representatives, too. Reviving the credit market is a mechanism for improving the business environment. It is not very likely for interest rates to fall in the next one year, Kalin Hristov pointed out.

Reblog this post [with Zemanta]