Bulgaria: Annual economic growth slows in Q4 on weaker private consumption
February 14, 2018
A second estimate of national accounts figures shows that the economy expanded 3.5% annually in the final quarter of 2017, a notch lower than the 3.6% rise reported in the preliminary estimate released on 14 February. Growth in the fourth quarter decelerated from the third quarter’s 3.9% and marked the slowest expansion since Q3 2016. Despite the moderation, full-year growth came in at 3.6% (2016: +3.9%), pointing to healthy economic fundamentals.
A slowdown in private consumption was largely behind the deceleration in the quarter; private consumption growth slowed from a 4.6% annual increase in Q3 to 3.6% in Q4. The deceleration largely reflected growing unemployment and higher inflation throughout the quarter, which weighed on growth. Fixed investment, on the other hand, accelerated to a 4.5% increase in Q4 (Q3: +4.3% year-on-year). The pick-up in fixed investment partly reflected ongoing inflows of EU investment funds into the economy, boosting public capital expenditure and higher private investment supported by buoyant business confidence. Overall, the expansion in total consumption moderated from 4.3% in Q3 to 3.8% in Q4.
The external sector performed poorly in the fourth quarter. Exports expanded 2.0% in Q4, the slowest growth since Q4 2015 (Q3: +4.1% yoy). Growth in imports, on other hand, accelerated from a 5.1% annual rise to 8.3%, a three-year high. The acceleration in imports reflected higher inflows of capital goods into the economy, attesting to the strength of the domestic economy. As growth in imports exceeded growth in exports, the external sector made a negative contribution to growth in the fourth quarter.
In quarter-on-quarter terms, economic growth inched down from 0.9% in Q3 to 0.8% in Q4.