Bulgaria: Growth moderates in Q4 but surpasses expectations
February 14, 2020
The economy grew 3.5% year-on-year in the fourth quarter, slightly down from the third quarter’s 3.7% outturn but beating market expectations, according to a preliminary release by the Statistical Institute on 14 February.
A preliminary breakdown showed that the modest slowdown reflected a downturn in fixed investment (Q4: -1.5% year-on-year; Q3: +1.8% yoy), dragged down by cooling business sentiment and a weak industrial sector amid faltering external demand. Indeed, exports slumped (Q4: -1.5 yoy; Q3: +1.3%), on wider European weakness; meanwhile, imports fell 2.7%, following a 1.2% increase in Q3, most likely due to European supply-chain disruptions. On the other hand, total consumption strengthened further (Q4: +5.0% yoy; Q4: +4.9% yoy) thanks to an extremely tight labor market, improving consumer confidence and strong wage growth.
On a quarter-on-quarter, seasonally-adjusted basis, growth inched down to an almost two-year low of 0.7%, from 0.8% in Q3.
More comprehensive data will be released on 5 March.
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, coupled with weakness in the EU economy, pose downside risks.