Bulgarian economy is recovering slowly, according to the Center for Economic Development, which has conducted research on the tendencies of Bulgarian economy in July. Figures show that the economy, although showing some improvement parameters, will get out of the crisis and attain economic growth in the fourth quarter of 2010.
“We expect that 2010 will end with a negative growth, perhaps little, close to 0, yet negative”, Georgi Prohaski, Head of the Center for Economic Development, commented.
“The economy is expected to recover by year’s end and early 2011. However, the economic growth will be low, since the factors determining a more dynamic development are currently lacking. Due to the economy’s structure, the country is short of sufficiently dynamic export-oriented sectors. Indeed, some exports are boosting the economy, but the sectors mentioned above do not have enough weight to bring about a more serious growth. Domestic consumption has shrunk and private investment is very low. In the next 2 years, investments will not be restored to their previous levels, since they were directed in construction and real estate- sectors that were hit the hardest by the crisis. A growth of some 1.5/2 % is very unlikely next year”, Mr Prohaski reckons.
The recovery of European markets and the rapid development of some Asian countries is enabling Bulgaria’s export to increase its volume, especially in the machine-building industry, as well as the export of investment goods and raw material. The index for the boost of Bulgarian economy is the rising share of GDP export, which suggests higher competitiveness of Bulgaria's export production internationally. The preliminary data for the inflow of foreign direct investment are far from satisfactory- some 0.7% of GDP over the first five months of the year. Since investment projects are delayed, foreign direct investments will take 1 or 2 years to start growing again. Yet, they will not reach their levels prior to the economic downturn. Inflation is 1.5%, and although it exceeds inflation in the euro zone, the exceeding margin is low. In terms of unemployment levels, Bulgaria equals the EU.
Economic growth requires the attraction of new foreign investment. Bulgaria should improve its business climate, maintain a balanced budget, develop its business services, as well as stabilize its economic and tax policies.
“Bulgaria should not lose its strategic goals, namely accession to the euro zone”, Georgi Prohaski goes on to say. “Whatever problems we might have, we should not forget Bulgaria joining the currency mechanism. This will be extremely beneficial to Bulgaria’s business, economy and citizens. It will lower income tax percentages, reduce risk and attract more investment. Bulgaria’s participation in the euro zone is the country’s most reliable way to attract investment, boost the economy and business. This should remain priority for Bulgaria’s economic policy. “, Georgi Prohaski, Head of the Center for Economic Development concluded.
English version: Vyara Popova
