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One year after the beginning of the financial crisis effects for the Bulgarian economy are relatively mild
submited on 22.08.2008 in category Political stability | Fiscal affairs | Monetary policy | Regulated markets | Privatisation | Macroeconomic developments
One year later global crisis effects for the Bulgarian economy seem relatively mild. The emergence of these effects has been for now visible in two dimensions – rising cost of financial resource (domestic and international) and “cooling down” of the dynamics on the capital market after a few years of fierce development.
For the moment the financial crisis does not produce serious reflection on the Bulgarian banking system, mainly due to the fact that foreign headquarters – owners of Bulgarian banks, have not been considerably affected by market turmoil. Still there is a notable effect on the banking market and it is visible in rising interest both on credit and deposits.
Although the impact of the crisis on the Bulgarian capital market was not that vividly expressed, as it was with mature markets, it is still present.
Gradually Bulgarian institutional investors began to change their investment policy, attempting to diversify their holdings and thus limit their exposition toward risks, stemming from the contraction on the local capital market.
The segment of mutual funds turned out to be one of the most affected by the problems on the capital market. On one hand, negative developments on the Bulgarian and foreign stock exchanges reflected unfavorably on many funds’ investment portfolios, especially those in the more risky segment.
As a whole Bulgarian savors react within the expected behavior in times of global crisis - among those who in recent years oriented toward high-yield and more volatile instruments, began to return toward traditional lower-risk savings alternatives, such as bank deposits and cash.
The immediate effect of the global crisis for now is relatively weak regarding foreign direct investments, allocated to Bulgaria. In theory they are less sensitive to the current conjuncture on the financial markets, because they are rather determined by long-term strategic priorities.
Bulgaria remains loosely affected by the global financial crisis, still this crisis is the main external risk before the development of the Bulgarian economy in the next 1-2 years, especially if spill-over effects in the European economy emerge.
submited on 22.08.2008 in category Political stability | Fiscal affairs | Monetary policy | Regulated markets | Privatisation | Macroeconomic developments
One year later global crisis effects for the Bulgarian economy seem relatively mild. The emergence of these effects has been for now visible in two dimensions – rising cost of financial resource (domestic and international) and “cooling down” of the dynamics on the capital market after a few years of fierce development.
For the moment the financial crisis does not produce serious reflection on the Bulgarian banking system, mainly due to the fact that foreign headquarters – owners of Bulgarian banks, have not been considerably affected by market turmoil. Still there is a notable effect on the banking market and it is visible in rising interest both on credit and deposits.
Although the impact of the crisis on the Bulgarian capital market was not that vividly expressed, as it was with mature markets, it is still present.
Gradually Bulgarian institutional investors began to change their investment policy, attempting to diversify their holdings and thus limit their exposition toward risks, stemming from the contraction on the local capital market.
The segment of mutual funds turned out to be one of the most affected by the problems on the capital market. On one hand, negative developments on the Bulgarian and foreign stock exchanges reflected unfavorably on many funds’ investment portfolios, especially those in the more risky segment.
As a whole Bulgarian savors react within the expected behavior in times of global crisis - among those who in recent years oriented toward high-yield and more volatile instruments, began to return toward traditional lower-risk savings alternatives, such as bank deposits and cash.
The immediate effect of the global crisis for now is relatively weak regarding foreign direct investments, allocated to Bulgaria. In theory they are less sensitive to the current conjuncture on the financial markets, because they are rather determined by long-term strategic priorities.
Bulgaria remains loosely affected by the global financial crisis, still this crisis is the main external risk before the development of the Bulgarian economy in the next 1-2 years, especially if spill-over effects in the European economy emerge.
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