Bulgaria's real GDP increased at an annual rate of 0.8% in the third quarter of 2013, accelerating from 0.2% in Q2 - the quickest pace of growth in more than a year, according to the flash estimate of the statistics office. The Bulgarian economy also recorded its biggest quarterly growth rate in two and a half years as seasonally-adjusted GDP was up 0.6% q/q in July-September, following a drop of 0.1% in Apr-June.
The bounce in the growth momentum is associated with a higher level of final consumption expenditure, which rose 0.4% y/y in Q3, accelerating from 0.2% yearly growth in Q2. Exports also helped pull up the GDP figure as sales abroad of Bulgarian goods climbed 6.7% y/y in Q3 after increasing 4.5% y/y in the previous quarter. The rise in economic activity coincides with a higher employment rate of 48.2% in Q3, up by 0.3pps y/y, which, however, reflected a contraction in the working age population and a smaller number of employed persons.
The quickening growth of consumption expenditure was due to a deceleration in the decline of household spending, which fell 1.0% y/y in Q3, narrowing from a 1.3% y/y drop in Q2. The pace of increase of government outlays slowed to 2.1% y/y in Q3 from 2.6% y/y in the second quarter. Furthermore, the value of purchases that contribute to gross capital formation was up 1.2% y/y in Q3, while imports climbed 5.0% on the year.
In October, the government lowered its economic growth projection for 2013 to 0.6% from an earlier estimate of 1.0% due to revised expectations of the level of domestic demand. In addition, both the IMF and the EC have cut their GDP growth forecasts on Bulgaria to 0.5% this year, down from previous estimates of 1.6% and 0.9%, respectively.
It is expected that economic activity in the remainder of 2013 will be driven by public expenditures and the export-oriented industries.
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