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

The bank analysts reported that according to flash estimates of the National Statistical Institute, the gross domestic product (GDP) grew by 1.7% in real terms in 2014, significantly improving the result of 2013 (1.1%). “With a major positive contribution to the positive dynamics was domestic demand (2.8 pp), while external demand influenced much more moderately - by 1.5 pp.” said the economic analyst at Raiffeisenbank Emil Kalchev.

Leading factor of domestic demand was final consumption, giving 1.9 pp to the GDP growth, followed by gross capital formation - by 0.9 pp, whereas imports acted in the opposite direction (by -2.6 pp).
“On the supply side, for the first time since 2009, all three sectors of the economy contributed positively to the GDP growth. The most solid of them was the contribution of services (0.7 pp), followed by industry (0.5 pp) and agriculture (0.2 pp).” added Kalchev.

The analysis of Raiffeisenbank noted that the budget balance was positive (EUR 69.1 mn) as of January 2015, for the first time since April 2014. Growth in revenues (by 19.3% yoy) and decreased expenditures (1.3% yoy) caused the rise compared to the corresponding month from last year.
Within the geographical structure of the foreign direct investments (FDI), The Netherlands was the leading foreign investor in Bulgaria for 2014, followed by Austria and the UK, as most FDI during the last year were focused in the services sector, the review reported.

According to the analysis, the coverage of the monetary base with FX reserves remained high in January (156%), which guarantees the stability of the currency board.

In January, for third consecutive month, lending to businesses and individuals contracted by 8.5% yoy, reaching BGN 49.0 bn, as lending was accomplished in the varying dynamics of the average nominal interest rates. On the other hand, the volume of deposits increased again on an annual basis - by 2.6% (BGN 1.4 bn), up to BGN 53.5 bn in January. By components, households’ deposits rose by 3.1% yoy (BGN 1.2 bn), reaching BGN 38.2 bn, while those of non-financial enterprises stepped up by 1.3% yoy (BGN 189.2 mn), to BGN 15.3 bn.