The Center for Economic Development (CED) expects the decline of Bulgaria's gross domestic product to decelerate to some 5 per cent in the last quarter of 2009. The GDP drop for the full year 2009 is also expected at 5 per cent, according to a CED report released on Friday.
The Center's experts predict a slight economic growth only in the third or fourth quarter of 2010.
The acceleration of exports has resulted in a surplus on foreign trade in goods and services for the first time sicne the third quarter of 2004. The current account deficit contracted to 2,600 million euro for January-November 2009, and its GDP share dropped from 22.5 per cent to 7.6 per cent on an annual basis.
After an unprecedented shrinkage of 24.3 per cent for exports and 34.7 per cent for imports in January-November 2009, the situation has been gradually improving since October, with exports increasing year-on-year for the first time in November, by 6.3 per cent. For the eleven-month period, exports stood at 10,800 million euro (FOB) and imports at 15,300 million euro (CIF).
The trade deficit was halved, from 9,200 million to 4,500 million euro (FOB/CIF) or 13.4 per cent of projected GDP. The CED expects exports for the full year to reach 12,000 million euro, imports 17,000 million euro, and the deficit 5,000 million euro or 15 per cent of GDP. The signs of recovery of the European and global economy prompt an expectation of a gradual rise of external demand and a more substantial increase of exports after March-April 2010, the report says.
By the end of November 2009, the inflow of foreign direct investment was estimated at 2,630 million euro, half of the level a year earlier. After adjustment for the data from the financial statements of joint ventures, the FDI figure may reach 3,500 million euro. There is a strong likelihood of the dramatic contraction of capital flows in 2009 to be followed by a gradually quick recovery of the influx of capital in 2010 without reaching the record highs of 2007 and 2008.
The reason is that Western companies will again transfer capacities to countries and regions with lower production costs, and Bulgaria ranks among the countries with excellent opportunities to attract business. The country has sufficient advantages: market potential, low taxes, low production costs and public-private partnership possibilities, but the success will largely depend on good organization and good administration, the CED argues.
In 2010 the CED expects investments to remain unchanged from 2009 or even drop by some 3,000 million euro. Inflation is forecast at some 2.5-3 per cent this year, up from 2009.
According to monthly figures of the National Employment Agency, unemployment accelerated in the last months of 2009. It stood at 9.13 per cent for December (up from 6.27 per cent a year earlier) and will probably peak at some 10 per cent in the winter and spring of 2010.