Raiffeisenbank (Bulgaria) EAD published its monthly analysis based upon the latest available macroeconomic data

The bank’s macroeconomists make reference to the decline of industrial output which continued for the second consecutive month (-1.5% in October), following the decrease of the production and distribution of electricity, heat and gas. At the same time, in manufacturing which has a leading role in the industrial sector, a 1.1% yoy growth was reported.

The analysis mentions that for the first time since the end of 2008 building construction stepped up, against the backdrop of the continuing overall recovery of construction output.

Similarly to the preceding months, the real volume of domestic trade marked a decrease in October, too. Despite this, import augmented at a fairly dynamic pace (8.7% yoy), significantly outperforming that of export (2.8%). The dynamics of import is an indicator of a continuing increase of consumption and most notably of investment. A development similar to the one observed in Q3, when the deterioration of the foreign trade balance resulted entirely from the growth of import of investment goods, is taking shape.
In the analysts’ opinion, in November the 0.1% deflation resulted from the larger-than-expected decrease in the foods prices.

The continuing moderate increase of the loans to non-financial enterprises and the decrease of household loans in November, as well as the recovery of deposit growth after the temporary fluctuations in depositors’ behaviour in October, are also noted in the analysis.

„The stable increase of imports is a clear indication of a continuing increase of domestic demand also in the last quarter of 2012”, commented the Chief Economist of Raiffeisenbank Kaloyan Ganev. „At the same time our earlier expectations for a weaker export growth are materializing; in this setting the positive dynamics of consumption and investment prove to be indispensable in compensating the negative influences of the external environment. Those influences will however not allow a tangible acceleration of the growth of the Bulgarian economy in 2013”, Ganev added.