Bulgaria: Economy gathers momentum at the start of 2019
June 6, 2019
According to comprehensive data released by the Bulgarian Statistical Institute on 6 June, the economy grew 3.5% in annual and seasonally-adjusted terms in the first quarter of the year, a notch above the preliminary estimate and picking up from the previous quarter’s upturn (Q4 2018: +3.2% year-on-year, seasonally-adjusted). Moreover, on a quarter-on-quarter basis, growth in seasonally-adjusted terms accelerated to 1.2% from 0.8% in Q4 2018.
Domestic demand lost stride in Q1. Total consumption cooled again (Q1: +4.5% yoy s.a.; Q4 2018: +5.0% yoy s.a.), mainly due to household spending losing pace amid higher unemployment and consumers turning more pessimistic. Similarly, fixed investment decelerated markedly, rising 2.5% year-on-year (Q4 2018: +6.6% yoy s.a.).
External sector metrics improved, however, and fueled the overall expansion. Exports of goods and services rose a strong 5.1% year-on-year despite a more challenging global trading environment (Q4 2018: +1.4% yoy s.a.). Likewise, import growth accelerated to 3.9% in Q1 (Q4 2018: +1.6% yoy s.a.).
Looking ahead, growth is expected to remain solid this year, primarily buttressed by domestic demand. A tight job market and higher wages are seen supporting private consumption, while the continued absorption of EU structural funds and cheap borrowing costs should prop up investment activity.
Author: Javier Colato, Economist