- Political stability
- Fiscal affairs
- Monetary policy
- Regulated markets
- Privatisation
- Macroeconomic developments
submited on 23.04.2012 in category Regulated markets | Fiscal affairs | Privatisation | Political stability | Monetary policy | Macroeconomic developments
Most analyses of the external trade usually tend to be focused on the growth of exports and imports as a whole or by product categories, but few of them actually focus on the dynamics of net exports (exports minus imports). A look on the official statistics reveals some interesting trends regarding external trade.
On one hand, the net export or the trade balance of Bulgaria for the last 12 months up to January 2012 (the latest available data) is negative, amounting to €3.3bn., albeit decreasing by 7% or €230m within a year in nominal terms (i.e. the change is attributable both to the potential increase of the foreign trade turnover and price changes).
The contribution of different product categories is, however, uneven. Bulgaria is a net exporter of consumer goods and raw materials, as the net export grew compared to 2011, and is a net importer of investment goods and energy resources, as the net import of these two groups of commodities is increasing. Substantial increase of net imports (by some 20% y-o-y) is seen with energy resources, resulting mostly from the rising prices of imported fuels. The net import of energy resources is responsible for about 80% of the trade deficit.
If we look at consumer goods, Bulgaria is a net exporter of furniture and household appliances (i.e. durable consumer goods), largely due to the contraction of exports related to the stagnated real estate market, and of clothing and footwear. Meanwhile, Bulgaria imports more than exports food, beverages and tobacco products, pharmaceutical and beauty products, and other consumer goods (including automobiles).
Observation on external trade with commodities shows that Bulgaria is a net exporter of non-ferrous metals and agricultural commodities, whose net export reported growth of 41% y-o-y, partly due to the spike of prices on the international marketplace. Bulgaria, however, imports more chemicals, textile materials and energy resources.
Bulgaria is a net importer of investment goods (including machines and equipment, vehicles and spare parts). A trade deficit for investment goods is typical for all converging economies in Eastern Europe.
The analysis of external trade is important, so far as on purely mechanical grounds, the net export, rather than export by itself is a more reliable and comprehensive indicator for foreign trade. The analysis of external trade by product groups makes sense also because it shows one of the transmission channels for external shocks to the Bulgarian economy. In the beginning of 2012 there were the first visible signs of cooling of the European economy, which is expected to lead to deceleration of growth in Bulgaria in the second half of 2012. For example, as a result of the decrease of industrial orders in the Eurozone, the net export of non-ferrous metals from Bulgaria is likely to shrink or to slow down its growth rates. It is possible for us to see a deceleration of the net export of other commodities and consumer goods. In the same time, the Bulgarian economy is strongly dependent on the imports of energy resources and accordingly, potentially vulnerable to fluctuations of the prices of the main commodities, as the ones observed during the past 3 years.