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Economic growth reaches 5.9% y-o-y in Q1, consumer prices go down in May.
submited on 21.06.2005 in category Fiscal affairs | Monetary policy | Macroeconomic developments
submited on 21.06.2005 in category Fiscal affairs | Monetary policy | Macroeconomic developments
GDP growth accelerates for a sixth quarter in a row reaching 5.9% in the year till March. Growth was as much as 3.9% two years ago. Major factor behind the acceleration of economic growth is the favorable market conditions for Bulgaria’s heavy industries. For a few year now the soft monetary policies in America and in Europe have been giving an advantage to the durable goods productions. Thus demand for raw materials has grown substantially, which has been reflected in a sensible rise of their prices on the international markets. In such an environment, the heavy productions in Bulgaria found growing markets without undertaking any restructuring. The gross value added in the industrial sector grew by 8.2% in Q1, which is twice as fast as the industrial production growth throughout the past two years. However market condition will eventually change, following the tightening of the Fed’s policy and – in a while – of the ECB policy. Basic materials productions in Bulgaria will have to adapt to a market that is expecting higher efficiency.
The volumes of capital formation will remain decisive factor for economic growth in the country. In addition, it is still important how fast the resource are being reallocated to more productive enterprises. The capital formation growth keeps its two-digit pace, however it decelerates to some 11% in the year to March (down from 16% a year ago).
At the same time, the CPI in May was negative at -0.5%. Accumulated inflation for 2005 is 2.6%, whereas for the same period of 2004 it was 2%. A traditional seasonal adjustment of food prices was recorded in May - by -1.6% on April. Surprisingly, transport services suffered almost negligent rise in prices (0.3%) while fuel prices during the month were going up steadily.
The volumes of capital formation will remain decisive factor for economic growth in the country. In addition, it is still important how fast the resource are being reallocated to more productive enterprises. The capital formation growth keeps its two-digit pace, however it decelerates to some 11% in the year to March (down from 16% a year ago).
At the same time, the CPI in May was negative at -0.5%. Accumulated inflation for 2005 is 2.6%, whereas for the same period of 2004 it was 2%. A traditional seasonal adjustment of food prices was recorded in May - by -1.6% on April. Surprisingly, transport services suffered almost negligent rise in prices (0.3%) while fuel prices during the month were going up steadily.
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