Bulgaria’s economy has started emerging out of the crisis and the first sustainable signs of this happening have already appeared. One such sign is the considerable increase in exports at the end of 2009 and the first half of 2010 by more than 12 per cent, as well the decreasing unemployment rates. This is what data on Bulgaria’s macroeconomic state shows, taken from an analysis conducted by the Bulgarian Industrial Association (BIA). Kamen Kolev, deputy chairman of the BIA, told a Radio Bulgaria reporter more details of the factors determining the positive tendencies in Bulgarian economy:
“As far as export is concerned, the positive signs are that we are once again back to our traditional markets – these are the EU countries and, first and foremost, Italy and Germany where export has risen by some 20 per cent. While several months ago we relied mostly on our markets in Turkey and China, i.e. countries that have remained almost unaffected by the crisis and by which we compensated the export into EU countries, then in the past four months, there is a rise in this direction. The higher revenues from exports are due already not only to higher prices of leading export goods such as copper, iron, and others but they are also due to the larger output.”
Kamen Kolev also comments that there is an invigoration witnessed in most economic sectors with the exception of the construction sector that suffered the heaviest drop compared to all EU countries. This drop is still continuing although its rate has been now diminished.
“The reasons for this drop lie in the construction boom with its unreasonably high prices and unprecedented amount of construction sites before the crisis. But the real estate bubble has burst. The other reason is that the state budget has still not paid its dues to construction companies, and they amount to some 640 million leva (320 million euro). So far, only 20 per cent of these debts have been repaid, which means there are also administrative and bureaucratic obstacles. To help this sector emerge out of the crisis, we need to launch large-scale infrastructure projects with EU funds that will, to some extent, push the sector forwards and will give new jobs.”
On the one hand, positive tendencies are witnessed, but many obstacles still stand in their way. Kamen Kolev explains in detail where the major problems lie:
“The main problem is the legal framework, which is virtually missing, and it could direct investors to sectors of high added value. Foreign direct investments (FDI), even in previous years, when they experienced a boom and reached as high as 6 billion euro, were directed to only one or two sectors – construction and real estate. Their flow was determined by market forces only and thus they were directed to sectors where the positive outcome was not as significant as it could have been. This shows that via appropriate mechanisms, state authorities could direct such investments towards priority economic sectors. These are the processing industries where investments are very low – some 8 to 10 per cent of the total number of FDI, as well as healthcare, education, and innovations. But investors need incentives and an improved legislation to do this.
Kamen Kolev also explains which are the most promising sectors of Bulgaria’s economy:
“For years on end, the most promising sectors were construction, real estate, and financial institutions. More than 60 per cent of FDI were directed there. Some new sectors that have become popular in recent years and have drawn huge investments worldwide, these are information technologies, power generation, the pharmaceutical industry, electronics, the food industry, organic farming, and tourism. We think that Bulgaria should also rely on these sectors as having of the best prospects and potential”.
The analysis of the Bulgarian Industrial Association shows that Bulgaria might emerge out of the crisis in the third or fourth quarter of this year, which, according to Kamen Kalev, means that the economic recession will be over, and an economic growth will start to be felt. He explains that this recovery process might take long as Bulgarian economy needs to compensate for a drop of 6 per cent during the crisis. The BIA forecasts that in the next several years, Bulgaria will be unable to reach the economic growth of 5 to 6 per cent of the period before the crisis, but that the country will start having positive economic indicators by the end of the year at the latest.
Translated by: Rossitsa Petcova
