Raiffeisenbank (Bulgaria) EAD published its regular monthly macroeconomic analysis of the data available as of the end of November.

According to the bank’s analyst team, in Q3 the Bulgarian economy continued developing in a similar fashion to the one observed in the first half of 2012. Gross domestic product increased by 0.9 per cent year-on-year (y-o-y) which was in the expected range. A better-than-forecast development was present in consumption and investment which stepped up vis-à-vis the same quarter of 2011 respectively by 3.1 per cent and 5.1 per cent. At the same time, the dynamic of exports of goods and services was more unfavourable than projected – its annual growth rate was 0 per cent, following from the weaknesses of economic growth in the EU.

Note is taken of the slowdown of the inflation rate to 0.3 per cent month-on-month, due to the normalization of the dynamics of food prices in the international markets. The bank’s analysts point, however, that the inflation accumulated so far is higher than the initial projections, and at the end of the year a value in the range 4.4 to 4.6 per cent can be expected.
Unemployment in Q3 decreased from 12.3 per cent to 11.5 per cent, and this value reflected a stagnating labour market and the lack of new employment opportunities.
The cumulative budget balance moved to negative territory (-0.1 per cent of GDP) after five consecutive months of surpluses; for the end of the year the deficit is expected to fall significantly below the 2.1 per cent value registered in 2011.

Credit growth slowed down on an annual basis in October, and compared to the previous month there was practically no increase. The growth of deposits also decelerated, and the introduction of the tax on deposit interests as of January 2013 is among the possible explanations.

„The latest data on the European economies are not very encouraging, we also witnessed the official announcement of a new Eurozone recession”, commented Kaloyan Ganev, the bank’s Chief Economist. „Against this backdrop the economic growth achieved by Bulgaria can be interpreted as a moderately positive phenomenon as far as only the Baltics, Poland, Slovakia, and Malta did better than us. It is a positive fact that the dynamics of domestic demand managed to compensate the slowdown of the external sector. Compared to the weak last quarter of 2011, our expectations are for a continuation of the positive developments in the key macroeconomic indicators of the country in Q4 2012, too”, Ganev added.