The uncertainty around the global financial markets and the slowing growth seen by some major European economies are expected to have an impact on Bulgaria as well. So far experts from different spheres of economy are optimistic about Bulgaria, even in the case of recession for some European countries.

According to the Agency for Economic Analyses and Forecasting (AEAF) the “ Uncertainty on the global financial markets and the slowing growth recorded by some major European economies will influence Bulgaria in two ways.”

On one hand, those factors have led to a global appreciation of credit resources and have made foreign investors more cautious when taking decisions. “This may cause a decline in real estate investments - an important component of the FDI,” the agency said.

“Also, the growth slowdown in the EU can lead to lower foreign demand, which can hurt the economy and cause the FDI to decline. So far there are no indications that this will happen and it seems that our country will manage to weather the storm, “AEAF concluded.

„Indeed, the Eurozone's growth is expected to slow down from the current 2.1% to 1.2% in 2009 but this will not affect Bulgaria in a drastic way. Some exporters may see weakening demand but there will be no implications on a macroeconomic level,”Georgi Stoev, managing partner in Industry Watch says.

The opinions of the two institutions differ as far as recession possibilities are concerned. AEAF's experts think the country will rather report economic growth than recession.

The next official GDP forecast comes out in the autumn. The last prognosis was for a 6.2% hike in 2008. “There are no reasons to think that the forecast will be lowered.”

Georgi Stoev, however, warns that the recession risks are coming from inside the country. “The lack of reforms in the public sector and in the judicial system are not only hindering growth, but posing recession risks as well,” he said.

As far as the different sectors of economy are concerned, AEAF said that a slowdown in construction of residential buildings is expected. “But this will be compensated by the active construction of office and business buildings,” the agency commented.

In the financial sector, the AEAF pointed out that the capitalization of Bulgarian banks and financial institutions is very high and they will not be hurt.

„The effect of the global slowdown has been felt in Bulgaria for some time, but not on all market segments. Some markets (such as the vacation homes segment) suffered a correction even before the problems in the Eurozone started,“ said Atanas Gergov, Colliers International managing director.

In his words, all segments are developing well. “Those niches in which the deals are sealed between the entrepreneur and the client themselves have not been hurt by the crisis (once again with the exception of vacation homes). The investment market is the only one that really suffered from the global trend.”

Petar Slavov, chairman of ProCredit Bank's management board commented on the functions of the banking system in the background of the global uncertainty. “We saw what could happen if we get involved in the war for market share – where you pursue growth but undervalue the fundaments of banking, and more specifically of crediting.”

Prokopi Prokopiev, Corporate Policy director in Enemona Jsc, said the weakening European economies will limit the chances of Bulgarian exporters to expand their positions on the stagnating European market.

„Bulgaria's economy will continue to grow but its pace will inequitably slow down as the current levels are unstable,” he said.

As to the level of indebtedness of local public companies, Prokopiev said debt always poses a risk, but in his opinion, Bulgarian public companies have not accrued a lot of debt.

Konstantin Abrashev, BenchMark Asset Management portfolio manager, commented on the prospects before the Bulgarian Stock Exchange. In his words “unlike other times where markets suffered periods of massive sell-offs due to a single reason (the Enron scandal, the September 11 attacks, the Russian crisis) the factors today are many and different.”

In such cases investors are examining the development scenarios for each company, paying more attention to the negative factor and this leads to their extreme cautiousness. If the leading international economies see positive development, the good news will come to Bulgaria and will eventually influence the local market. But until that happens, the current situation will not change,” Abrashev pointed out.