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    Raiffeisenbank: Lower growth in Q4 than expected


    Raiffeisenbank (Bulgaria) EAD (RBBG) publishes its regular monthly economic review with comments on the macroeconomic data available in February.

    The bank analysts reported that according to flash estimates of the National Statistical Institute, the real GDP grew by 1.2% yoy and by 0.3% qoq in Q4 2014. The most substantial growth marked the gross fixed capital formation (3.1% yoy), followed by the consumption (1.2%). Export of goods and services stepped up by 4.5% compared to the third quarter of last year, while imports increased significantly by 6.9% yoy.

    “This data came after more promising Q2 and Q3 and are below expectations. According to the quarter-on-quarter growth rates, a growth of around 1.1% yoy is outlined for the whole year. GDP growth of 1.2% is projected for 2015.” said the economic analyst at Raiffeisenbank Emil Kalchev.

    Budget 2014 was marked by a disparity between the revenues’ and the expenditures’ growth - revenues grew slowly, unlike expenditures, which have increased excessively quickly. “With the amendments to the Budget Act, adopted on 7 November by the new government, this disparity was not corrected. Thus, the budget deficit reached a significant amount of BGN 3.0 bn, i.e. BGN 1.6 bn more than the deficit at the end of 2013. Relative to the GDP for the year (BGN 82.0 bn), this deficit constitutes 3.7% of it, or beyond the 3.0% limit of the Maastricht Treaty, which the EU countries are obliged to comply.” he added.

    The analysis of Raiffeisenbank noted that industry increased its production by 2.0% yoy in 2014, after a contraction by 0.1% yoy and 0.4% yoy in the previous two years. The growth was mainly driven by the manufacturing, while mining and the production of electricity, heat and gas marked a decrease. “For the entire year, the construction grew more intense than the industry - by 3.3% yoy. Its growth was on the back of civil and engineering construction (12.3% yoy), while buildings construction shrank again (-3.3% yoy).” added Kalchev.

    According to the analysis, the monetary statistics of the Bulgarian National Bank shows a high coverage of the monetary base with FX reserves, which is an indicator for the stability of the currency board. Lending to businesses and individuals contracted by 8.2% yoy, for the second consecutive month, reaching a total value of BGN 49.4 bn. Lending to non-financial enterprises registered a significant drop of 11.6% (to BGN 31.0 bn), while loans to households decreased slightly - by 1.6% yoy to BGN 18.4 bn. The decrease in lending was due to the write-off of the assets of the KTB.


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