Raiffeisenbank (Bulgaria) EAD (RBBG) publishes its regular monthly economic review with comments on the macroeconomic data available in middle of August.

The bank analysts reported that according to flash estimates data of the National Statistical Institute, in Q2 2015, GDP grew by 2.2% yoy in real terms, which was above the growth in Q1 (2.0% yoy). Final consumption increased by 2.1% yoy, while gross fixed capital formation stepped up by 1.4%, The net export remained negative at -1.2% of GDP. Nevertheless, on the back of the weaker euro in the period, the negative net export narrowed significantly, since in Q1 it was -5.8% of GDP.

“Reflecting the positive dynamics of the GDP in Q2, the employment rate rose by 0.8pp yoy to a level at 48.7%. Otherwise, the unemployment rate decreased by 1.5pp to 9.9%. Both indicators are anticipated to improve gradually in the coming quarters of the year.” said the economic analyst at Raiffeisenbank Emil Kalchev.

On the production side, in Q2, the output of industry went up by 2.7% yoy. Unlike the industry, construction shrank by 6.7% yoy in Q2, for the second consecutive quarter. “Its decline was a result of an expected decrease in buildings construction segment by 13.8%, which could not be compensated by the weak growth in the segment of civil and engineering construction by 1.8%.”  commented Kalchev.

The analysis of Raiffeisenbank noted that by the end of June 2015 the the gross state budget again accumulated a surplus of BGN 890.0 mn, for fifth month since the beginning of the year. “The reason was the much more intensive growth of total revenues by 15.1% yoy and the moderate rise of total spending by 2.1% yoy led to this result. The growth of total revenues was due mainly to rising VAT revenues by BGN 459.8 mn yoy as a result of increased consumption and government’s measures for tax collection improvement. In turn, the excise tax revenues also increased by BGN 171.9 mn compared to June 2014”, explained Kalchev.

Accumulated current account balance remained in positive territory in Q2 at EUR 61.1 mn, unlike the deficit of EUR -9.7 mn in Q2 2014.

Foreign direct investment (FDI) in the country totaled EUR 799.6 mn for the period January-June 2015, which was EUR 49.7 mn higher than the volume in H1 2014. Within the geographical structure of the FDI, leading investors in the country were the Netherlands (EUR 567.3 mn), followed by Austria (EUR 99.7 mn) and Norway (EUR 87.7 mn).