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    Raiffeisenbank: Industry grows, construction stabilizes


    The bank analysts reported that the industrial production index fell slightly to 103.9p, or by 1.7pp mom in February 2015. “However, it grew by 2.3pp compared to the previous February, a result of higher expenditures for acquisition of fixed assets in the sector by 3.9% in the last year.” said the economic analyst at Raiffeisenbank Emil Kalchev.

    The decline in construction slowed down to 1.7% yoy in February (-3.8% yoy in January) due to solid growth of 8.3% in the segment of civil and engineering construction. Despite the growth in the civil and engineering construction was not intensive enough to completely overcome the decrease in the sector for the period, it is expected to further accelerate based on improved absorption of EU funds. On the other hand, there are indications that the pace of decline in building construction will be increasingly slower.

    After thirteen months of decline, in February, the turnover of the domestic trade insignificantly rose by 0.1% yoy. The decline was held back by the wholesale trade. Its turnover continued to decline, but at a slower rate (-1.5% yoy). Against this background, the turnover of the retail trade grew moderately by 4.5% yoy, while the sales of cars and motorcycles, which in the previous two years had been registering double-digit growth rates, performed weakly.

    The analysis of Raiffeisenbank noted that budget balance went back into negative territory (BGN -174.6 mn) in February, not only neutralising the positive balance in January (BGN 69.1 mn), but also leading to a negative cumulative balance for the first two months of the year (BGN -105.5 mn). “Unlike Budget 2014, in which state expenditures grew significantly faster than revenues, in the first two months of 2015 just the opposite tendency was observed: expenditures grew cumulatively by 0.5%, while revenues by 13.3%. Within revenues, the growth was driven by the taxes, while the slowdown of expenditures was due to the reduction in social and capital expenditures, grants and subsidies.” explained Kalchev.

    A successful issuance of internal and external debt was accomplished in conditions of financial comfort. In the total increase of public debt, domestic debt grew during the period by BGN 1.3 bn yoy, while the external debt rose by BGN 4.5 bn to BGN 12.4 bn. In March, Bulgarian government issued a new government debt in the international markets of EUR 3.1 bn according the Medium Term Note (MTN) Programme. Three tranches were issued: with maturities of 7, 12 and 20 years and coupons 2.0%, 2.6% and 3.1%, respectively. The new debt will be used to refinance the old debt and budget deficits. The levels of the new Eurobonds achieved on the international markets were competitive enough in accordance to the rating of the country and caused significant investor interest, which speaks for the good position of Bulgaria to issue debt instruments. The debt is not expected to exceed the limit of 28-29% in the med-term, the third lowest level in the EU.


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