This report covers the key macroeconomic data and political developments for Bulgaria published between February 5 and March 5, 2014.

The Bulgarian economy expanded by 0.9% in 2013, quickening from 2012's 0.6% growth and beating government estimates, as well as those of the EC, the IMF, and the EBRD, whose median forecast was for a 0.5% rise. The growth was supported by rising government spending and strong exports: government expenditures advanced 2.1% last year, adding 0.2percentage points to overall growth, while exports rose 8.9%, contributing 5.8pps. On the other hand, household consumption fell 2.3% in 2013, subtracting 1.6pps.

On a related note, the income of Bulgarian households increased 7.8% year on year to BGN 2,927 (EUR 1,497) in the fourth quarter of 2013, while expenditures increased at a faster annual rate of 9% to BGN 2,707. Income growth was also supported by falling consumer prices, which decreased for a sixth month in a row in January with the CPI index dropping 2.2% year on year, deeper than the 1.6% annual decrease in December.

However, the unemployment rate increased 0.6pps year on year to 13% in the fourth quarter of 2013 as the economy lost 20,200 jobs, most of which were high-skilled industry positions.

Key Points:

• The public debt-to-GDP ratio was up 3pps year on year to 18.4% at end-January 2014.

• Industrial output swung to a 1% year on year decline in December 2013.

• Retail sales growth eased to 5.6% year on year in December 2013.

• The current account showed a EUR 831.3mn surplus in 2013.

• The ruling Bulgarian Socialist Party has regained its lead, according to the latest Gallup International elections poll.

• Radical party Ataka has threatened to withdraw its support of the Bulgarian government if certain policy proposals and demands are not fulfilled.