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Capital Formation Growth Slows Down.
submited on 05.04.2005 in category Monetary policy | Macroeconomic developments
submited on 05.04.2005 in category Monetary policy | Macroeconomic developments
The history of macroeconomic stability in Bulgaria is not long (1998 was the first full year of stable money), however we know the economic growth acceleration and deceleration is normally preceded by the same movement in the investment dynamics, thus we consider the growth of capital formation a leading indicator of economic activity.
For the last seventeen quarters both indicators – GDP growth and capital formation growth – have been pretty much the same in their dynamics. The slowdown in the investment dynamics normally precedes the GDP growth slowdown by two or three quarters. The first slowdown in this period began in early-2001 and ended in early-2002 as the GDP growth fell from 5.4% down to 3.9% y-o-y. Meanwhile, the investments growth went from 34% in mid-2000 down to 8% in mid-2001. The second slowdown period was similar in both length and growth percentages (it happened between late-2002 and the third quarter of 2003).
Since mid-2004 the investment growth have been slightly slowing down – from 15.7% y-o-y in the first quarter down to 13.1% in the last quarter. Although this is not a significant slowdown compared to previous decelerations, this gives a warning signal on the future GDP growth rates. There is a good chance that the GDP growth slowdown in registered in the first quarter data.
For the last seventeen quarters both indicators – GDP growth and capital formation growth – have been pretty much the same in their dynamics. The slowdown in the investment dynamics normally precedes the GDP growth slowdown by two or three quarters. The first slowdown in this period began in early-2001 and ended in early-2002 as the GDP growth fell from 5.4% down to 3.9% y-o-y. Meanwhile, the investments growth went from 34% in mid-2000 down to 8% in mid-2001. The second slowdown period was similar in both length and growth percentages (it happened between late-2002 and the third quarter of 2003).
Since mid-2004 the investment growth have been slightly slowing down – from 15.7% y-o-y in the first quarter down to 13.1% in the last quarter. Although this is not a significant slowdown compared to previous decelerations, this gives a warning signal on the future GDP growth rates. There is a good chance that the GDP growth slowdown in registered in the first quarter data.
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