Raiffeisenbank (Bulgaria) EAD (RBBG) publishes its regular monthly economic overview with comments on macroeconomic data, available in August. According to the analysis, the GDP growth in Q2 2014 was relatively high compared to the growth in the same period last year.

"The real GDP growth in Q2 2014 was relatively high: at 1.6% yoy. Industry and services recorded an increase by 4.5% yoy and 1% yoy, respectively, while the agricultural sector reduced its production by 1.5% yoy due to bad weather and floods", said the economic analyst of Raiffeisenbank Emil Kalchev. "Our expectations are that in H2 the GDP growth will be similar to the reported growth in H1 2014", said Kalchev."The employment has improved in Q2, and the unemployment rate declined to 11.4%, which is close to the average unemployment rate in the Eurozone", he added.

According to the analysts of Raiffeisenbank, one of the major macroeconomic problems of the Bulgarian economy is the high budget deficit. "Applied to the GDP in H1 (BGN 35.3 bn.), the accumulated deficit amounted to 2.8%. On the other hand, the public debt to GDP ratio, remains one of the lowest in the EU", said Kaltchev.

The analysis of RBBG also noted that according to the monetary statistics of the Bulgarian National Bank, loans to households and businesses reported growth for a fifth consecutive month, reaching 3.1% yoy in June 2014. At the same time, the level of non-performing and restructured loans declined slightly by 0.1pp, but remained significantly high at 22.2%.

"Our expectations are lending to support the real economy, which is currently affected by the uncertain political situation due to the upcoming elections", said Kalchev.