Bulgaria: Economy keeps pace at the end of 2019 on solid consumption dynamics
The economy grew 3.1% in annual terms in the final quarter of last year, down 0.4 percentage points from the preliminary estimate and slowing from the previous quarter’s revised 3.2% expansion (previously reported: +3.7% year-on-year), according to comprehensive data released by the National Statistical Institute. Meanwhile, on a quarter-on-quarter basis, growth in seasonally-adjusted terms inched up to a revised 0.8% (previously reported: +0.7% quarter-on-quarter) from 0.7% in Q3. The fourth quarter’s result brings full-year growth for 2019 to 3.4%, up from the 3.1% expansion clocked in 2018.
Total consumption strengthened (Q4: +6.3% year-on-year; Q3: +5.8% yoy), mainly due to buoyant household spending amid an extremely tight labor market, improving consumer confidence and strong wage growth. Moreover, fixed investment picked up steam in the fourth quarter, rising 3.0% year-on-year (Q3: +2.1% yoy), likely due to robust EU fund inflows.
The external sector, on the other hand, weakened, most likely due to European supply-chain disruptions, a frail EU economy and a lackluster performance of the industrial sector. Exports of goods and services dipped 0.4% year-on-year, swinging from Q3’s 4.2% increase, while imports also contracted 0.2%, contrasting Q3’s 5.5% jump.
Momentum is seen easing this year, as reduced job growth will restrain consumer spending growth. That said, marked wage hikes will sustain spending dynamics, while investment activity will strengthen on the back of a pick-up in EU funds absorption, cushioning the slowdown. Lingering global trade tensions, coronavirus spillovers and weakness in the EU economy pose downside risks.