The first green shoots of recovery are evident in Bulgaria, the Bulgarian Industrial Association (BIA) said on Wednesday.

Analysing the macroeconomic situation in 2005-2009, BIA has studied in detail the development of the economic sectors and their contribution to gross value added and GDP, employment, investments, indebtedness and export trends by product group.

Conclusions are drawn on this basis and in light of the latest data released by the National Statistical Institute.

BIA says year-on-year export growth at the end of 2009 and especially in the first five months of 2010 by 12.3 per cent, as well as the first drop in the jobless rate in March from February - a trend which continued in June, boosts the hopes of local companies that they can start preparing for an increase in production.

These positive trends apart, the analysts note that the absorption of EU funds remains low. A mere 8 per cent of funding under the operational programmes for the first three years of the 2007-2013 period has been paid out, some of it in advance payments. The absorption rate for the ISPA Programme is a mere 41 per cent, although projects must be completed and paid for by the end of 2010. Just 76 per cent of funding under the SAPARD Programme, which ended in 2009, was paid out.

The European Commission granted positive compliance assessment of all operational programmes in February, which means that considerable resources were unblocked and can be used in the economy, BIA said. According to the best-case scenario, 3,400 million leva are to be agreed and absorbed in 2010 alone.

The analysis also identifies increased redistribution from the budget as a problem. Budget expenditures increased from 37.9 per cent of GDP in 2008 to 39.5 per cent of GDP in 2009 and 42.3 per cent of GDP in 2010.

The analysts say that economic restructuring due to the crisis is expected to have a positive effect on total-factor productivity through the survival and strengthening of viable enterprises.

Source: BTA