- Political stability
- Fiscal affairs
- Monetary policy
- Regulated markets
- Privatisation
- Macroeconomic developments
submited on 26.10.2012 in category Political stability | Monetary policy | Macroeconomic developments
Or how the slowdown of the global economy will affect Bulgarian exports.
Global growth began to slow sharply in 2012, particularly in the second half of the year. Currently, the risk of fiscal and financial crisis in the Eurozone and other advanced countries remains high.
In October 2012, the International Monetary Fund (IMF) updated its forecast for global growth by the end of 2012 and in 2013, as the new forecasts are slightly more pessimistic than the projections from July. Forecasters expect the growth of world gross domestic product to slow down to 3.3% annually in 2012 from 3.8% in 2011. In 2013, global growth is projected to accelerate slightly to 3.6% y-o-y.
The slow recovery of the global economy will reduce the growth of Bulgarian exports, which until recently was one of the main drivers of economic growth in Bulgaria.
What would be the quantitative effects of the cooling global demand for Bulgarian producers ultimately depends on the type of exported goods (whether they are raw materials and energy, consumer and investment goods) and the "geography of exports" (in other words, the markets, we export products to).
According to the latest official data, as of July 2012 Bulgaria's exports are still growing at a rapid pace - around 9% per annum in nominal terms (that is to say, that growth is partly due to higher prices rather than just increased volumes). Energy exports grew by 15% in nominal terms, while exports of raw materials lagged behind, increasing by 6% on a 12-month basis.
Bulgaria exports mainly to the euro area (46% of total exports), the new Member States (EU member states from Central and Eastern Europe), representing 15% of exports. Exports to non-EU Balkan countries represent 14% of Bulgaria’s production for foreign markets. Over the past 12 months continued the process of adaptation of Bulgarian producers to the shift of global economic center to the south and east towards Asia and Latin America. Exports to emerging Asian and Latin American countries have been growing by 26% and 22% respectively (please refer to the chart). At accelerated rates have also been rising the exports to the former Soviet republics (mostly Russia and Ukraine) – by 16% annually.
On the other hand, exports to the EU increased by a much slower pace. This trend is likely to continue in 2013, if we assume the IMF forecasts for economic growth in the regions. Economic growth in Asia and Latin America (respectively 7.2 and 3.9%) will be 2 to 3 times faster than the growth in Europe. The biggest risk for Bulgarian exports hides in the demand for Bulgarian products in the eurozone, whose GDP is expected to grow only marginally in 2013 - a mere 0.2%. It is likely that even this estimate may be too optimistic. In this case, the Bulgarian companies will continue to reorient, as long as it is possible, to the rapidly growing economies of the East.