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    Raiffeisenbank: Growth better than expected in Q1, we maintain our forecast for 1% GDP increase this year


    Raiffeisenbank (Bulgaria) EAD published the May issue of its monthly macroeconomic analysis based on the latest published data concerning the main indicators of the Bulgarian economy.

    According to the bank’s analysts, the 0.9% yoy economic growth in Q1 turned out higher than the initially expected minor decline. In general, positive developments were observed for both consumption which augmented by 2% vs. the first quarter of last year, and for investment which rose on a yearly basis for the first time since the end of 2008 (+1.3%). Thus, the favourable development of domestic demand fully offset the decrease of exports (-4.4%) in the first quarter of the year.

    In April the tendency of low inflation rates was still in place, the price increase vs. March being 0.2%, and 1.6% from year’s beginning, irrespective of the hikes in fuels and central heating prices.
    However, the unemployment rate continued to grow, and in Q1 it stepped up to 12.9%, while the rate of labour productivity growth slowed down considerably to 2.6%, due to the comparatively low economic growth and the deceleration in the employment decline vs. the peak of the crisis.

    The analysts of Raiffeisenbank marked as favourable the developments in the fiscal area – the realized surplus in April led to a considerable contraction of the budget deficit accumulated from the beginning of the year to 0.3%, and the fiscal reserve recovered to the levels observed at the end of 2011, amounting to BGN 4.9 bn.

    „The Q1 GDP data turned out better than the ones expected based on the short-term indicators”, commented Raiffeisenbank’s Chief Economist Kaloyan Ganev. „A careful look at details however shows that a significant part of the growth was due to the measures to boost tax compliance, and this does not imply an increase in economic well-being. The rates of growth of consumption, and especially of investment should be substantially higher in order to have a real recovery of the economy,” added Ganev.


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