LM Legal Services Blog

According to the report of the World Bank about the economic development of 29 countries in Eastern Europe and the former Soviet republics published on 2 July 2008, the long-term challenges for Bulgaria’s economic development are the growing age of the population, the need for higher productivity and the stimulation of the competition.

The country is more threatened by the demographic factors then any other country in the region. By 2025 the population of Bulgaria will decrease by 1/5 and the number of the old age pensioners will increase dramatically. In the last years the ratio of the number of the employed Bulgarians to the number of people in active age has been between 50% and 60%, while this ratio for the other EU member-states  has been 70%.

In addition to this, Bulgaria, alongside Hungary is an active exporter of labour force. By 2015 the number of people in active age will sharply decrease and the Bulgarian government needs to prepare a plan of action now.

The World Bank insisted that Bulgaria and Romania should aim at a better integration into the world market by liberalizing the prices and improving the quality of the services in telecommunications, transport, energy and banking. Both countries should invest in the export of capitals and the production of highly skilled labour force. Bulgaria has to use the foreign investments in the country for developing new products at competitive prices.

The index of the producer prices for May 2008 showed an increase by 12.9% since May 2007, according to the National Statistics Institute.  For the same period the increase of the prices of consumer goods is 9.4% and of the investment products is 5.4%, while the highest increase is the one of energy – 24.8%. The inflation of the production on the domestic market is 13.6%, while on the international market it is 11.6%. According to the analysts, this comes to show that the market in Bulgaria is still not completely free, as local producers offer their production at competitive low prices abroad, while at the same they can compensate this by increasing their profit in Bulgaria.