Bulgaria's foreign trade deficit shrank 46% y/y to BGN 2.62bn (EUR 1.34bn) in January-August 2013 on the back of stable exports growth and declining value of imports, preliminary statistics office data showed. Exports amounted to BGN 28.7bn for the period, marking an annual increase of 7.9%. On the other hand, imports decreased 0.4% y/y to BGN 31.3bn. The Jan-Aug trade gap equalled 3.27% of this year's GDP projection, down from 6.23% in 2012.
The trade deficit with EU members decreased 45% y/y to BGN 1.47bn in Jan-Aug due to an 8.3% annual growth of exports as the Eurozone recovers. The trade deficit with non-EU countries also shrank 47% y/y to BGN 1.14bn in Jan-Aug.
On the demand side, the negative imports growth signals that domestic consumption remains subdued. In the short to near term, domestic demand could get a boost from rising diaspora transfers and increased government spending, which is likely to be reflected by higher imports down the road. However, growth in consumption will continue to be held back if the increased perception of political and economic uncertainty persists, thus suppressing individuals' propensity to spend and entrepreneurs' willingness to invest.
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