Bulgarias foreign trade gap continues to widen, exports down 6% y/y in Jan-Feb.

By bne IntelliNews May 10, 2012
Bulgarias foreign trade deficit expanded to BGN 931.4mn (EUR 476.2mn) in the first two months of the year, up from BGN 109.7mn a year earlier, preliminary data of the statistics office shows. In February alone, the gap added 33.1% m/m and stood at BGN 531.9mn, compared to BGN 73.2mn deficit in February 2011. Trade balances with both EU and non-EU states were negative. The EU states deficit accounted for 55.8% of the total gap in Jan-Feb, as opposed to BGN 21.2mn surplus in the year-ago period. Following robust 30% expansion in 2011, exports turned to decline this year and fell by 6% y/y in Jan-Feb, reflecting contracting foreign demand. We note, however, that the increase in total foreign sales has been following a downward trend throughout the course of the whole 2011, decelerating from more than 50% y/y in Q1 to only 13.6% y/y in December. In February alone, exports decline decelerated to 1.6% y/y, down from revised 10% annual drop in January. Positive developments in exports to non-EU states, which returned to 10.6% y/y growth from January's 14% y/y decline, were the reason for the improvement. Exports to EU-state, however, remained below their year-ago levels and the drop accelerated to 8.9% y/y in Feb from 7.3% y/y in the previous month. Imports grew by 7.5% on the year in Jan-Feb, due to 13.6% annual increase in Feb, up from revised 1.6% y/y in Jan. Still, the growth rate is slower compared to the 21.2% y/y increase registered last year. IntelliNews comment: In February we are already seeing rising imports value, which in our opinion is mainly an effect from the recent increase in international oil prices. Although due to still weak domestic demand imports volume should not rise substantially, the price effects will continue to push imports up. This, coupled with weakening foreign demand, especially in the EU, will continue to affect negatively Bulgaria's foreign trade balance throughout the year.
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