On 15th May, the National Statistics Institute of Bulgaria released preliminary date for the Gross Domestic Product. The figures show a fall in GDP of 3.5% year-on-year. The gross added value by industry is down 13%, by agriculture and services negative 3% and positive 0.9% respectively. Gross fixed capital formation had declined by 15.4%. At the same time, the aggregate of broad money M3 has been exhibiting a negative trend since September 2008 as well as the industrial production indexes. Unemployment is still contained at a 0.2% monthly growth.
Analysis and forecast (↑ increasing risk)
Money aggregate and industrial production, particularly manufacturer’s new orders are leading economic indicators for GDP growth. Given that they have been continuously negative since the fist signs of the global economic downturn were seen in Bulgaria in September 2009, a second quarter of declining economic growth is highly likely. This is also suggested by the continuously smaller amount of money allocated towards fixed capital investment, as suggested by the gross fixed capital formation statistics and industry wide surveys conducted by the Statistics Institute.
Unemployment, a classing indicator lagging behind GDP growth is likely to become a rising economic as well as social problem. Although the summer will ease the pressure on the labour market by creating seasonal employment, the heavy hit manufacturing industry, and quite probably textiles as well, will see layoffs. The pending closure of the large metallurgical factory Kremikovtzi induces additional unemployment related hardships.
Source: National Statistics Office of Bulgaria