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    Raiffeisenbank: Eurozone’s weaknesses and domestic uncertainty deteriorate the economic growth outlook of Bulgaria


    Raiffeisenbank published its monthly economic review of the latest available macroeconomic data

    In the analysis of the bank a considerable deceleration of economic growth to 0.3% yoy in Q4 2012 is noted, vs. the reported 0.9% with respect to the first nine months. The deterioration of the external environment, respectively the realized decline of exports by 1.7% vs. the same period of 2011, are pointed out. However, reference is made also to the fact that investments continued developing in a positive direction, and in Q4 their yoy growth rate equalled 5.6%, totalling 9.6% for the whole year.

    The weak economic performance at the end of 2012 was in line with the reported value of the current account deficit which was lower than expected: EUR 371.4 (0.7% of GDP).

    With respect to inflation, Raiffeisenbank’s analyst’s registered developments matching expectations: the monthly rate of the indicator in January was 0.4% vs. December, and food prices were the main determinant of the recorded value.

    The labour market showed negative dynamics: unemployment reached 12.4% at the end of 2012, and the annual average value equalled 12.3%.

    The publication mentions also the relatively high value of the budget deficit in January 2013: BGN 536.5 mn (0.7% of GDP), which in general was in line with the bank’s forecast for a higher value of the indicator for the whole year (2.0%) compared to the one written in the Law on the State Budget. The fiscal reserve fell in the same month to BGN 4.1 bn, and the decrease was due to the repayment of interest in principal of the Eurobonds which matured on 15 January 2013.

    The analysis makes note that in January, in accord with expectations, bad and restructured loans in the banking system continued rising, and their amount reached BGN 9.7 bn (or 22.6% of all loans).
    „The Q4 2012 GDP data are disappointing, as we expected to have in this quarter higher economic growth than in the previous three”, commented the Chief Economist of Raiffeisenbank Kaloyan Ganev. „The condition of the Eurozone economies is also worse than projected, and this will be negatively reflected in the results of the Bulgarian economy in the first quarter of the current year. The uncertainty related to the forthcoming parliamentary elections will also probably make investors postpone the realization of their intentions, as well as to make households be more cautious in their consumption. Under these assumptions, we need to review and lower our 2013 growth expectations from the current 1.5% to 0.5-1.0%.”, Ganev added.


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