LM Legal Services Blog

The Bulgarian economy will continue sinking in 2010. The decrease of the GDP will be of 1%, according to the Agency for Economic Analysis and Forecasts.  For 2009 the expectations are of a significant  decrease of the GDP of 6.3%.  Bulgaria will be in recession for two consecutive years.  The decrease of the investments and the retail index will continue in 2010.  The expenses in Bulgaria’s budget will not increase in order to avoid deficit.  The major reason for this is the world wide recession. Although there have been signs for upcoming end to the recession in the USA, the risks for the world and the European economy are still there.

The slowing down of the economies of Bulgaria’s major trading partners has led to shrinking of Bulgaria’s export. The export of goods has decreased by 30,7% in the first five months of this year and it is expected that the decrease will be 10,5% on an annual basis. This has its effect on the transport and freight. As result the total volume of the export will shrink by 12,3%. The limited crediting and the slow increase of the personal incomes has led to a decrease in the investments and the sales in the country itself. The expectations are that in 2009 the spending of the average household will shrink by 4.5% and of the government by 3%.

In the following years the domestic demand, which has been generating mostly by the foreign investments, will be hard to resume the growth of the  Bulgarian economy to the levels of the last years.  That is why the recuperation of the economy is expected to materialise through the export. Having in mind the current world wide tendencies, this will not happen in 2010.  To the contrary, the export will continue decreasing and the expectations are that it will shrink by 3,8% next year.  That is why the forecast is for economic decrease of 1% in 2010. This will be accompanied by relatively low inflation about 2,2%.

Bulgaria’s export has increased by 23 %, while the import in the country has increased by 27% for the first six months of the year in comparison to 2007 according to the National Statistics Institute. The export has reached 15.119 billion Bulgarian levs, of which export for 9.125 billion levs went to the EU countries. The increase of the export to non-EU countries has increased faster and its growth is 35%. The major export destination for Bulgarian goods is Turkey, where Bulgarian goods have sold to the value of 1.617 billion levs.

At the same time the import has reached 23.505 billion levs, of which the import from EU countries has been for 11.047 billion lev. Oil to the value of 4.789 billion levs is the major import from non-EU countries which has reached 10.87 billion levs. The major part of the imported products have come from Russia – to the value of 3.4 billion levs. Ukrainian goods (2.2 billion levs) are in second place, while Turkish goods (1.376 billion levs) take third place.

Bulgaria’s trade deficit has increased to 8.386 billion levs from 6.226 billion levs in the first half of 2007.