The bank's analysts report an increase of industrial production by 2.7% on an annual basis in August, as well as 3% average growth of construction in July and August. In wholesale trade there was a decline, but in retail trade the turnover kept rising which is an indication of continuing consumption recovery in those two months.
The current account in August had a positive balance in August (EUR 579.3 mln.), due to summer tourism revenues. For the first months of the year the balance was also positive: EUR 227 mln. At the same time the trade balance continued deteriorating as a result of the faster increase of imports vis-à-vis that of exports and this also supports the expectations for growth of domestic demand.
On the other hand, however, the analysis takes account of the high inflation present in September: 1.1% vs. the previous month resulting from the increase of food prices. Raiffeisenbank's forecast is for 4.4% at the end of the year, but according to the analysts of the institution this value could be exceeded if the unfavourable trend in food prices continues.
In the labour market, a minor decrease of the unemployment rate to 11.6% was recorded in September.
„The developments in the economy during the summer correspond to our expectations for an ongoing slow recovery of the economy", commented the Chief Economist of Raiffeisenbank Kaloyan Ganev. „With the advance of the autumn and the winter, however, we are bound to see deteriorating labour market indicators: a decline of employment and a rising unemployment rate. This will naturally be reflected also in the dynamics of bad and restructured loans, for which the reversal of the favourable trend has already started. Inflation is also likely to become a bigger issue until the beginning of the next summer which will have an adverse effect on the purchasing potential of the households", Ganev added.