Bulgaria in EU’s Top 5 in economic growth

published on 2/29/12 2:02 PM

Economy analyst Lachezar Bogdanov comments Bulgaria's economis stand in the context of situation in the EU

Photo: BGNES

The European Commission has released its latest economic forecast about the community’s countries. The general conclusion from the analysis is that the Eurozone will fall into a mild recession during the first half of the year and will experience a little bit of growth during the second half. It is noteworthy that the vanguard group of countries that will see GDP growth this year is made up of Eastern European countries exclusively. The leader in the chart is Poland, followed by Lithuania, Latvia, Romania and Bulgaria. The reason is that these countries are more disciplined, maintain lower state debts and have in this way fared better than the rest of the Bloc. The analysis of the European Commission suggests that the economies of nine countries from the community are likely to see negative growth. Greece has been forecast to see the biggest slump.

The prediction for Bulgaria has been cut on last November, and Brussels experts expect a GDP growth at 1.4 percent. The Ministry of Finance has not only confirmed this, but has said that despite lower GDP growth predictions Bulgaria has been sent into the group of the EU success stories, i.e. Bulgaria is fifth in economic growth rate in 2012. The Ministry has also recalled that Budget 2012 has been made in a conservative manner, with the GDP growth planned at 1 percent, and that up-to-date figures for the Bulgarian economy have been used by the European Commission. It is expected that during the second half of the year GDP will grow driven by the increased economic activity of the European Union. Brussels has praised Bulgaria for the surplus on its current account; for the stability of its banking sector and public finance that needs no corrections. The European Commission has placed an emphasis on the Bulgarian exports as the engine of the economy, and has also pointed to the need of boosting consumption in the country. This implies that Bulgarians should stop depositing their money in banks for high interest and should begin spending more instead, in support of the local economy.

For a commentary on the topic we talked to economic analyst Lachezar Bogdanov from Industry Watch. According to him the lowered prediction of the European Commission is chiefly due to the fact that the Bulgarian economy is open to investment flow as well as for trade, and the Eurozone crisis will inevitably impact on it.

To put it in a different way, the recession in some European countries will frustrate Bulgarian exports as well as the inflow of fresh capital to this country.

„The growth of exports ha salready started to slow down and in the event of a not very favorable setup in the Eurozone, it is not likely to remain high. This means that one of the main driving forces of the Eurozone will slow down”, Lachezar Bogdanov comments. “On the other hand, investment activity remains at relatively low levels and new private investments are not likely to arrive in large volumes. Domestic consumption growth is also low. All this draws up a picture of a relatively low growth. Compared to the rest of Europe this growth is not small, for two basic reasons. The first one is that unlike certain countries displaying enormous imbalances and lost competitiveness, no radical changes are necessary in a few spheres of Bulgaria’s economic life. No major reforms are necessary on the labor market either. Major layoffs can easily be avoided. The second reason is that the public finance is in much better shape than in the economies, dragging Europe downwards. We are facing no radical change as some other countries do, so there is no big threat of a major short-term hindrance of growth.”

Should we feel proud of Bulgaria’s good positioning among Europe’s top performers in terms of 2012 economic growth?

„The good news is that we have macroeconomic stability driven mostly by a relatively disciplined public finance and a conservative banking sector”, Lachezar Bogdanov from Industry Watch recaps. “However we can lose this very fast if populist polices come to dominate the country, as has already happened elsewhere. We should rather point to the benefits of this financial stability. Many reforms that have been conducted by Bulgaria at a very high social cost, such as the closedown of loss-making state-run companies, and these same reforms are on the agenda of other countries today. We have to be aware that thanks to all this we have been spared a worse recession and a harsher crisis. Now the reforms that we have made in hard times should be made by Italy, Greece, Portugal, Romania and Hungary. So, the European Commission predictions are a good reason for us to think over the fact why we are different from those countries and to make the right conclusions about good and bad policies that have sent those countries into the throes of such dramatic problems.”

Translated by Daniela Konstantinova

По публикацията работи: Tania Harizanova

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Bulgaria in EU’s Top 5 in economic growth

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