This report covers the key macroeconomic and financial releases as well as the political events from Bulgaria for the period of October 7, 2014 - November 5, 2014.

Bulgarian election winner CEDB reached preliminary accord with the rightist Reformist Bloc a month after the snap polls on October 5 but may lack the votes needed to win the parliament's approval. The political class has failed to convince households and businesses that a stable cabinet is on the way, while pessimism about the economy has increased significantly.

In its autumn economic forecast released on November 4, the EC said it sees Bulgaria's GDP growing 1.2% this year, which is slower than the 1.7% growth projected in May. The new projection is based on the prospects for a sluggish rise in private consumption and expectations for subdued private and public investment.

Another cause for concern is the execution of Bulgaria's 2014 budget. Busy allocating the power in the next government, politicians have not paid attention to the worsening fiscal position of the country. The nine-month budget deficit reached BGN1.48bn (€758.mn), or 1.84% of the projected economic output for 2014, suggesting that the shortfall will most likely exceed 1.8% of GDP this year, which still is the government's target. The projected deficit growth by the end of this year is expected to boost public debt to 28.4% of GDP from the current level of 23.2%.

Key points:

Bulgaria drops two places to 38th in World Bank's 2015 Doing Business ranking

Business confidence worsens for fifth straight month in October

Industrial output drop deepens to 1.9% y/y in August

Retail sales growth quickens to 4.5% y/y in August

Banking sector turns to net profit in Jan-Sept without results of troubled Corpbank

CEDB leader Boyko Borissov to head Bulgaria's new minority government backed by right-wing Reformist Bloc