Raiffeisenbank (Bulgaria) EAD has published its monthly analysis based on the latest macroeconomic data available at the end of January 2013.

The bank’s analysts report a continuing drop of industrial production in November (-1.8% yoy), as well as a decline of domestic trade (-7.4% compared to November 2011). At the same time, the growth of construction output continued (1.1% on an annual basis), mainly due to the more favourable dynamics of engineering construction, while building construction moved again to negative territory.

External trade demonstrated favourable developments regarding export of goods in November (with a nominal growth of 11.0% on an annual basis), while import shows a slight growth on an annual basis (0.5%). The latter implies a weaker domestic demand.

The reported dynamics of external trade are among the main reasons for an atypically positive balance of the current account in November at EUR 89.7 million. Cumulatively, since the beginning of the year, the current account balance also remained positive (EUR 50.3 million).

The increased prices of foodstuffs and services were the main determinants of the inflation rate reaching 4.2% at the end of 2012.

The labour market is reported as one of the key problems in Bulgarian economy with an unemployment rate of 12.5% at year-end despite the bank’s expectations for a bigger increase of the indicator since the beginning of winter.
The analysis also reports a considerably better-than-expected realization of the budget – the deficit for 2012 came to 0.5% of GDP, the value envisaged in the Law on the State Budget being -1.3%.
The macroeconomists of the bank also point out the decrease in the share of bad loans to 16.62% at the end of Q4 2012, compared to 17.25% in the previous quarter.

„The decrease of bad loans, registered by the Bulgarian National Bank at the end of last year, is predominantly the result of loans being written off from the balance sheets of the banks,” commented Raiffeisenbank’s chief economist Kaloyan Ganev. “There is no change in the economic situation to signify a sustainable drop of the indicator. The latter can become a fact only when economy starts registering a more considerable growth, and respectively when employment shows signs of recovery. Our forecast for a 1.5% growth of GDP in 2013 means that we are still far from such a development,” Ganev added