S&P sees strong growth prospects for Bulgaria in mid-term.

By bne IntelliNews October 1, 2012
Credit rating agency Standard & Poors expects Bulgarias (BBB/Stable/A-2) GDP to grow by 0.5% in 2012 with subdued domestic demand and external pressures from the EU leading to this low growth forecast. Nevertheless, the agency is optimistic on the countrys economic potential and sees a 3% economic expansion in 2013 on recovering external demand. Domestic demand has strengthened in first-half 2012 amid wage growth and despite a weak labour market, according to the agency. The country remains competitive due to its low labour costs, despite the depreciation of several currencies in the region (Serbia, Romania). FDI will follow a path of gradual recovery but will not reach pre-crisis levels due to stalled credit inflows. On the public finance side, S&P expects annual deficit to be below the governments target of 1.6% of GDP in 2012 and a continued improvement next year. Public debt is forecast at around 17% at year-end and seen to decline after that. Expected rise in discretionary spending ahead of the 2013 general elections will likely boost imports, although the current account deficit should not rise to pre-recession levels. The agency sees limited political risk in the country, despite weakened support for the minority government. The currency board arrangement is broadly supported and is not at risk. Commitment to macroeconomic stability and the peg raise the sovereign's creditworthiness.

Related Articles

EC urges Bulgaria to comply with EU rules on free movement of capital.

The EC has sent a reasoned opinion to Bulgaria over failure to comply with EU rules on the free movement of capital, the EC said on its website. The privatisation act in Bulgaria introduces ... more

Govt seeks delay of antitrust rules violation procedure against Bulgaria.

Bulgaria will be seeking an extension of the court procedure filed by the EC against the country over irregularities found in the assignment of digital broadcast spectrum, transport minister ... more

Bulgarians hold EUR 100mn in deposits in Cyprus.

Bulgarian individuals and companies hold EUR 100mn in Cypriot banks according to ECB data, BTA reported quoting Reuters. The largest EU depositors in the crisis-hit country are Greece with EUR ... more

Notice: Undefined index: subject_id in /var/www/html/application/controllers/IndexController.php on line 335