Bulgaria’s annual GDP growth speeds to 4-year high in Q2 – flash estimate

By bne IntelliNews August 14, 2015

Bulgaria’s real GDP growth quickened to 2.2% y/y in the second quarter from 2% y/y in the previous three months, reaching its best reading since Q2 2011. The improvement was driven by final consumption and exports, while investments slwoed, data from the statistics office's flash estimate showed on August 14.

The available breakdown across expenditure components shows significant acceleration of final consumption real growth, to 2.1% y/y in Q2 from 1.1% y/y in Q1. Separate data on government and household consumption was not provided in the flash estimate, but previously released indicators suggest that government spending must have driven growth. Budget data, released earlier this month, showed a 71% y/y surge in grants to the government in H1, which most probably reflects an increased uptake of EU funds. At the same time, the average growth of retail sales, which is an indicator of private consumption, slowed to 1.3% y/y in Q2 from 3.1% y/y in Q1.

The real annual growth of both exports and imports decelerated, to 3.6% from 12.9% and to 7.5% from 9.7%, respectively, and the contribution of net exports to GDP growth remained negative, but narrowed to 1.2% from 5.8% in Q1.

On the other hand, gross fixed capital formation went up 1.4% y/y in Q2, slowing from a 2.1% y/y increase in Q1.

On a seasonally-adjusted quarterly comparison basis, however, growth slowed to 0.4% in Q2 from 0.9% in Q1, mainly due to a drop in exports. Exports fell 6.3% q/q, reversing a 4.8% q/q rise in Q1, while imports declined 2.5% q/q versus a 4.7% increase in Q1. On the other hand, final consumtion growth rose 0.7% q/q in Q2 after staying flat in Q1, and gross fixed capital formation grew 0.3% q/q, reversing a 0.1% decline in Q1.

Nominal GDP amounted to BGN20.92bn (€10.7bn) in Q2. Final consumption, gross capital formation and net exports accounted for 78.3%, 22.9% and -1.2% of the total. Exports and imports were equal to 66.8% and 68% of nominal Q2 GDP, respectively.

The Bulgarian National Bank (BNB) recently said it expects the country's annual GDP growth to be largely sustained in H2, driven by private consumption and investments, whereas government consumption will have a small positive contribution and net exportswill have a slightly negative contribution.

Bulgaria’s government projects GDP growth of 1.4% for 2015. Among other forecasts, the World Bank sees full-year growth at 1.1%, the European Bank for Reconstruction and Development (EBRD) and the European Commission both expect 1% expansion, and the International Monetary Fund (IMF) sees it at 1.2%.

Bulgaria’s economy grew 1.7% in 2014.

The statistics office will publish detailed Q2 GDP data on September 4.

GDP, % y/y real (flash estimate)        
  Q3'14 Q4'14 Q1'15 Q2'15
GROSS DOMESTIC PRODUCT 1.5 1.3 2.0 2.2
Final consumption 0.8 1.4 1.1 2.1
Gross fixed capital formation 4.4 3.3 2.1 1.4
Exports of goods and services -2.8 5.4 12.9 3.6
Imports of goods and services 2.6 7.5 9.7 7.5
Source: NSI        

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