Raiffeisenbank (Bulgaria) EAD published its monthly macroeconomic analysis based on data available as of the end of August. According to the bank’s analyst team, consumption and investment dynamics improved and a stabilization of consumers’ expectations was observed. Analysts also report that for the first time since the beginning of 2008 expenses on long-term assets of companies increased.
The publication identifies more favorable developments compared to the first months of the year in key sectors of the Bulgarian economy. Positive developments can be observed in service proceeds, also the construction sector output developed positively.

In the labor market unemployment remained high at 12.3 per cent and the slight improvement compared to the first quarter resulted only from seasonal factor influences.
The sudden inflation rise to 1.5 per cent on a monthly basis in July resulted mainly from the increase in the prices of electric and heating power, but also from the expectations that there would be an increase in the food prices on the international market. The latter, however, is expected to have a positive influence on Bulgaria’s export.

The issuance of EUR 950 million of foreign debt in the form of Eurobonds led to an increase in the fiscal reserve to BGN 7.1 billion. Currency board assets also improved, now covering 192.9 per cent of the money base (banknotes and coins in circulation and in reserve in the banks).
The registered surplus of EUR 271.5 million on the current account is explained with the considerable improvement regarding the income outflow from the country to a net value of only EUR 29.9 million. In spite of the import increase, which was mainly due to the rise in domestic demand, export also registered a good increase rate on an annual basis (10.7 per cent).

„In view of the performance of the other EU economies, the developments in Bulgaria are more than satisfying”, said Kaloyan Ganev, Chief Economist of the bank. „Disturbing is still the fact that unemployment remained high despite the recovery of domestic demand. Nonetheless, we can expect a certain improvement with regards to this in the second half of the year - provided that economy, and, in particular services being the biggest sector, will continue to grow in the same way. In the next years, however, we will hardly witness unemployment lower than 9-10 per cent”, added Ganev