The global financial crisis and its impact on Bulgaria

[ВМРО]

Full forecasts for Bulgaria by the European Commission, released on 3 November 2008 (http://ec.europa.eu/economy_finance/pdf/2008/autumnforecasts/bg_en.pdf)

Buoyant growth to slow down
Economic activity has so far remained robust and
resilient to the deterioration in the global economic
environment. Real GDP growth accelerated to
slightly above 7% in the first half of 2008, driven
in particular by buoyant domestic demand and
very strong investment. Nevertheless, the
worsening external conditions are expected to have
an impact on Bulgaria. The exceptional degree of
uncertainty on the international financial markets,
a longer-lasting slowdown in global economic
activity and high energy prices will inevitably
affect domestic demand. Thus, real GDP growth is
expected to decrease from 6½% in 2008 to 4½% in
2009. However, there are major downside risks to
this central scenario, especially for investment and
private consumption. Growing risk aversion
among foreign investors could result in a more
significant deceleration in capital inflows and
investment than assumed; rising interest rates and
persistently high inflation may additionally
dampen real disposable income and private
consumption.

Consumption and investment expected to
decelerate
In line with more moderate credit growth, rising
interest rates and high inflation, as well as some
deceleration in wage and employment growth,
private consumption expenditure is expected to
slow from 5% in 2008 to about 4½% in 2009. By
contrast, public consumption expenditure growth
will be further boosted by additional current
spending in 2008, reaching around 4%.

A modest reduction in external imbalances
After a particularly weak performance in 2007,
export growth seems to be recovering in 2008.
However, as a result of lower external demand,
exports will decelerate in 2009, while a partial
upward correction will follow in 2010, as
industrial restructuring and the large foreign
investment stock affect the country's export
potential. At the same time, due to weaker
domestic demand, import growth will decelerate
from 9% in 2008 to around 6¼% in 2009. Thus,
the negative contribution of net exports to growth
will decrease. The trade deficit is expected to
narrow only gradually in 2008-2010, inducing a
small reduction of the very high current account
deficit to about 21½% of GDP from a level of
slightly over 24% of GDP in the second half of
2008. This, together with capital transfers from the
EU, should bring the economy's net borrowing
position to slightly below 20% of GDP by 2010.

http://i214.photobucket.com/albums/cc103/ivailotasev/Economy/Bulgariaeconomicdata.jpg

Wage growth and inflation to subside from
current peak
Employment growth remains strong at around
3¼% in 2008. With the employment rate expected
to reach almost 64% in 2008, increases in 2009-
2010 are expected to be of a smaller magnitude.
The unemployment rate will maintain its
downward trend, falling below 6% in 2009.
Nominal wage growth has accelerated to above
20% in 2008, compared with 18% in 2007, largely
as a result of tight labour market conditions.
However, part of this wage growth might also be
explained by the ongoing reduction in the grey
economy triggered by successive cuts in income
taxes and social contributions. Moreover, public
sector wage developments have been in line with
private sector increases. Nominal wage growth is
expected to remain high during the forecast period.
However, it may decelerate as a result of weaker
labour demand due to increased wage costs and the
economy slowing down in the next two years.
Labour productivity is expected to increase from
around 3% in 2008 and 2009 to almost 3½% in
2010, well below wage growth. As a result,
nominal unit labour costs developments will
continue to reflect a persistent deterioration of
price competitiveness compared with the EU
average.
HICP inflation has surged in the first half of 2008
and is expected to average 12½% in 2008. The
imminent global economic downturn and the
resulting fall in domestic demand could potentially
slow inflation to below 8% in 2009, followed by a
further deceleration in 2010. However, future
developments in commodity prices and the
capacity to contain second-round effects remain
crucial to the inflation outlook.

Budgetary position remains strong
At around 3¼% of GDP, the projected general
government surplus is above the official target of
3% of GDP in 2008. The better-than-targeted
surplus is mainly due to higher-than-expected
revenue and a result of favourable growth
composition, higher inflation and improved
collection of direct taxes. On the expenditure side,
however, there may be some slippages with regard
to the official targets, as additional social and
infrastructure spending has been approved.
On the basis of the no-policy-change assumption
the general government budget surplus will remain
high at slightly below 3% of GDP in 2009 and
2010. A small decline in the revenue-to-GDP ratio
compared to 2008 is linked to a less tax intensive
composition of growth, notably a projected
slowdown in domestic demand. The overall
expenditure ratio is expected to remain below 40%
during the forecast period.
In line with strong nominal GDP growth and
continued high primary fiscal surpluses, general
government gross debt is expected to drop well
below 10% of GDP by the end of 2010.

http://i214.photobucket.com/albums/cc103/ivailotasev/Economy/Bulgariaeconomicforecasts2008-2010.jpg

[mdka]

What is the point of this thread?You could post that info in the economy one

[ВМРО]

Just mentioning that the world is approaching or probably has already reached its biggest economic crisis since WW2 onwards is enough.Bulgaria isn't an isolated island of eternal macroeconomic stability and the problems of the world's leading economies will inevitably have a bad impact on our economy.
This thread doesn't have obligatory character and you'll certainly not get sanctioned in case you don't write here:).If 3tmk shares your opinion, the thread will be closed in several hours.If not, simply ignore it.

[mdka]

^^
Нямам нищо против темата,но вече беше пусната подобна и второ кризата вече е икономическа не финансова,Б-я не е изолиран остров наистина,но ако запазим 4% икономически растеж през следващите 2 години и 7-8% безработица,няма да окаже чак такова влияние върху живота на обикновения българин,който не живее на кредит за разлика от американците

[bgrs]

^^ Голяма част от населението живее на кредит.

[mdka]

^^Не е вярно,е завис какво разбираш под живее на кредит

[ВМРО]

Имаше друга тема, но не ме кефеше заглавието й.

[bgrs]

Значи изплаща жилища или коли. Или дори и да не го прави, има кредитни карти.

[ВМРО]

Bulgaria's Largest Hardboard Producer Sacks 30% of Its Workers (http://www.novinite.com/view_news.php?id=99518)



Bulgaria's largest hardboard producer Fazerles AD laying off 30% of its workers - or 116 persons - because of the effects of the global financial crisis, the information agency BTA reported.

The factory, which is located in the northeast city of Silistra, is also stopping one of its two manufacturing lines because of the decreased demand of its products.

85% of the production of Fazerles Silistra is exported to various countries in Europe, Asia, and Africa.

The wood-based panels factory was founded in 1977, and has been private since 1993. The total capacity of its two production lines is 18 million square meters per year.

Bulgaria's Textile Industry Expects Severe Blow by Global Financial Crisis (http://www.novinite.com/view_news.php?id=99482)

Bulgaria's textile industry expects a 30-35% decrease of export orders from Europe in the first half of 2009 because of the effects of the global financial crisis.

The news was announced by Valeriya Zhekova, the Chair of the Governing Board of the Bulgarian Association of Producers and Exporters of Clothes and Textile, during Wednesday's conference on the perspectives of the textile industry and the effects of the global financial crisis.

According to Zhekova, the one-third reduction in export order would lead to the sacking of one-third of the workers in the textile industry, which employs about 145 000 persons in the whole country.

The Association's data shows that 90% of Bulgaria's textile production is destined for exports. Over 3 000 Bulgarian firms work in the sector.

One textile factory in the northern city of Pleven has already gone bankrupt as it loss its foreign clients. Another one will be closed in the northwest city of Vidin for the same reason. 150 workers will be laid off from the closure of the two plants.

Dimitrov: Global Financial Crisis to Facilitate Gray Economy (http://www.novinite.com/view_news.php?id=99476)


Bulgaria's Economy Minister Petar Dimitrov stated Wednesday that the global financial crisis is likely to have the effect of pushing legal businesses into the gray economy.

The Minister pointed out the consequences of the financial crisis would lead to more brutal competition, and would exert pressure forcing many more companies and workers to get into the gray sector.

During a round table in Sofia Wednesday, Dimitrov and the Finance Minister Oresharski disagreed over the pros and cons of the introduction of the euro as a parallel way of payment in Bulgaria.

The Economy Minister said this would have the effect of lowering the inflation, whereas the Finance Minister retorted the introduction of the euro at a this wold bring more negatives than positives.

[paF4uko]

Спокойно - ако дължиш 100€ на банка, имаш проблем, но ако й дължиш 100 000€, тогава банката има проблем. :)

[mdka]

Според мен тия шивашки предприятия яко преиграват,не могад да ме убедят ,че търсенето на сравнително евтини и сравнително качествени дрехи е намаляло толкова,имам чувството ,че искат да сплашат работниците

[ВМРО]

Bulgaria's Industrial Output up by 0,6% in October (http://www.novinite.com/view_news.php?id=99669)


Bulgaria's total industrial output increased by 0,6% in October compared to the September values, according to the latest data of the National Statistical Institute released Tuesday.

The output of the country's processing industry increased by 0,1% in October, the production of tobacco products grew by 29,7%, and the book-printing grew by 14,6%. Bulgaria's chemical industry, however, registered a decline of 7,1%.

Despite the modest increase compared to the previous month, the country's total industrial output in October 2008 dropped by 1,9% compared to October 2007.

At the same time the revenue of Bulgaria's industry sector also went down by 3,4% in October compared to revenue raised during the previous month.

Bulgaria's "Kaolin" Sacks 10% of Its Workers over Financial Crisis (http://www.novinite.com/view_news.php?id=99634)

Bulgaria's mining company Kaolin Jsc has decided to lay off 10% of its workers because of the effects of the global financial crisis.

The company announced the news Monday on the website of the Bulgarian Stock Exchange.

The redundancies are made in order to reduce the company's expenditures over the consequences of the global financial crisis.

Kaolin Jsc is also planning to reduce the production of some of its lines over the winter in order to optimize its production expenditures, and to reduce the consumption of the costly natural gas.

Bulgaria's Kaolin is a major producer of non-metalliferous minerals. It has regional offices in Romania, Serbia, Greece, Turkey, the Ukraine, Italy, Syria, Israel, and Egypt.

The company is headquartered in the northeast Bulgarian town of Senovo, Ruse District.

[Turnovec]

After The Crisis: A Parody of Some Corporate Logos

http://www.businesspundit.com/wp-content/crisis-logos/ford.jpg

http://www.businesspundit.com/wp-content/crisis-logos/Lg.jpg

http://www.businesspundit.com/wp-content/crisis-logos/nike.jpg

http://www.businesspundit.com/wp-content/crisis-logos/PleaseBuy.jpg

http://www.businesspundit.com/wp-content/crisis-logos/ferrari.jpg

http://www.businesspundit.com/wp-content/crisis-logos/Fiasco.jpg

http://www.businesspundit.com/wp-content/crisis-logos/dowjones.jpg

http://www.businesspundit.com/wp-content/crisis-logos/Yahoo.jpg

http://www.businesspundit.com/wp-content/crisis-logos/goodyear.jpg

http://www.businesspundit.com/wp-content/crisis-logos/dell.jpg

http://www.businesspundit.com/wp-content/crisis-logos/Crisisler.jpg


Bonus Logo

http://www.businesspundit.com/wp-content/crisis-logos/apple.jpg

[just4ivaylo]

^^Haha, I like the one's for Ford and Best Buy. :D

[JloKyM]

МУаххаха, great logos :lol::lol::lol:

[Turnovec]

Due to the current financial crisis facing the world at the moment and in the interest of cost cutting, energy preservation and health & safety, the light at the end of the tunnel will be switched off until further notice.

Sincerely,

God

:lol::nuts::ohno:

[ВМРО]

Bulgaria's Car Sales down by 17% in November 2008 (http://www.novinite.com/view_news.php?id=99684)


The number of new cars sold in Bulgaria in November 2008 dropped by 17% compared to the number sold the previous month.

This becomes clear from data of the Union of Car Importers in Bulgaria as quoted from the Pari Daily, which comments that the decrease is most likely related to the effects of the global financial crisis.

A total of 4 185 new cars, trucks, and buses were sold in November 2008. Only the new cars were 3 973, which is 699 cars fewer than the number of cars sold in October 2008 - a 17% decrease.

The drop in the number of the sold new buses and trucks went down by 42,5% in November compared to October.

A total of 53 716 new vehicles were sold in Bulgaria in January-November 2008, which is still an 11,9% increase compared to the same period of 2007.

Opel has sold the greatest number of new cars in Bulgaria in the first eleven months of 2008 - 5 045. It is followed by Toyota and Volkswagen with 4 816 and 4 434 sales respectively.


Sisecam Auto Glass Factory in Bulgaria's Turgovishte Stops Production (http://www.novinite.com/view_news.php?id=99710)


Sisecam's automotive glass factory in Bulgaria's Turgovishte - Trakiya Otocam - stopped its production over the decreased demand in Europe caused by the effects of the financial crisis.

The news was by the factory leader of the Podkrepa Labor Confederation Yuksel Yumerov as quoted by the Pari Daily.

The Turkish glass producer Sisecam has four factories in the northeast Bulgarian city of Turgovishte. Yumerov explained none of these was threatened by closure even though the company had already closed three of its plants in Turkey over the consequences of the global financial crisis.

The unionist is also quoted as saying Sisecam Bulgaria was not planning to lay off any workers. The company management, however, could reduce the working time, relocate workers to some of its other plants in Turgovishte, or ask workers to take an unpaid leave.

The Sisecam factories in Turgovishte are the largest investment abroad of the Turkish glass producer, and one of the largest green field investments in Bulgaria since 1989.

Bulgaria Govt Boosts Development Bank Capital as Anti-Crisis Measure (http://www.novinite.com/view_news.php?id=99720)

Bulgaria's cabinet voted Wednesday to increase the capital of the Bulgarian Development Bank by BGN 330 M as a measure to counter the effects of the global financial crisis on the real sector.

The government takes such a step for the second time in less than two month after it increased the capital of the Bulgarian Development Bank by BGN 100 M on November 4, 2008.

The Bulgarian Development Bank (BDB) is a top priority financial instrument of the government as it is creating various schemes to support entrepreneurship especially with respect to the export potential and competitiveness of the Bulgarian economy.

Wednesday's financial injection of the BDB will enable it to grant credits to commercial banks, which in turn would be able to provide loans to small and medium-sized enterprises with more favorable conditions.

The BDB finances its activity by emitting bonds, through EU funds, and though credits from local, and international financial institutions. It was set up in April 2008 as a successor to the former "Encouraging Bank" in order to help for Bulgaria's economic development.

The increases of the capital of the BDB are not limited by its statutes. The decision to increase its capital are made by the general assembly of its shareholders but the Bulgarian state always holds no fewer than 51% of its shares, which are non-transferable.

The BDB statutes stipulate that its shares could be obtained by the European Investment Bank, the Development Bank of the Council of Europe, the European Investment Fund, and development banks of other EU member states.


Bulgaria Railroad Company to Discharge 1070 Employees over Financial Crisis (http://www.novinite.com/view_news.php?id=99789)


Nearly 1070 employees of the Bulgarian State Railroads (BDZ) are going to be discharged by the end of 2009, the BDZ Executive Director, Hristo Monov reported.

Monov spoke during the Thursday meeting between BDZ, the Transport Ministry, the National "Railroad Infrastructure" Company, and the "Podkrepa" Trade Unions.

The meeting's agenda included discussions of 20 emergency measures to deal with the effect of the global financial crisis on the Bulgarian railroads.

410 workers are slated to be discharged form the BDZ system by the end of 2008. All procedures, except the social compensation package, have been arranged. The package is going to be negotiated on December 16.

The Trade Unions insist on a minimum of four full salaries and other social benefits as compensation to those dismissed.

Future dismissals include 200 individuals nearing retirement age, and an additional 460 employees.

The Trade Unions firmly stated that they would create a strike committee in case their requests were not met and would undertake decisive strike actions.

At the meeting, the National "Railroad Infrastructure" Company, confirmed their commitment towards paying all salaries for the last three months, minimum dismissals, and readiness to sign a new collective labor agreement.

Financial Crisis Pushes Bulgaria's Military Industry into Energy Sector (http://www.novinite.com/view_news.php?id=99786)

The effects of the global financial crisis and the lack of public procurement orders from the Defense Ministry are forcing Bulgaria's large companies from the military industry to consider taking part in energy projects.

This was announced Thursday by representatives of Bulgaria's military industry at a special press conference dedicated to the problems of the defense factories.

The CEO of the Bulgarian electronics manufacturer "Bitova Electronika" JSC Ognyan Kostadinov said the large-scale energy projects were important about Bulgaria's foreign policy, and therefore were related to the problems of the defense sector.

The defense businessmen pointed out that the public procurement procedures of the Bulgarian Defense Ministry were formulated in such a way that they excluded Bulgarian firms from participating in them.

The CEO of Samel-90 JSC Petar Georgiev said the tenders for the modernization of the Bulgarian Army had requirements that Bulgarian firms could not meet such as a high annual turnover, or a large number of years of experience in the respective sector.

In his words, no Bulgarian defense company was among the present contractors of the Defense Ministry for the modernization of the army.

"I wonder whether these requirements are crafted by Bulgarians, or with the interference of foreign consultants. The offset programs are just a delusion. No offset projects have started so far", Georgiev said.

The Chair of "Bulgarian Defense Industry" Association Petyo Milkov said Bulgaria should adopt the US model of relations between the state and the military industrial complex as the Pentagon bought defense products primarily from US companies.

The member companies of the Association have realized sales for a total of BGN 400 M in 2008 so far. 96% of these were realized abroad.

The representatives of the defense industry insisted that the Bulgarian state take measures to ensure more adequate cooperation with state administration as a whole, and with the ministries of defense, finance, and economy.

[just4ivaylo]

^^Wait a second...1070 discharged from BDZ? Is it really that bad? I don't see how BDZ can eliminate so many jobs and still function. Any info on how many people work for the company?

[ВМРО]

According to this article (http://74.125.77.132/search?q=cache:w3jpQZXgW8wJ:www.capital.bg/show.php%3Fstoryid%3D341175+http://www.capital.bg/show.php%3Fstoryid%3D341175&hl=bg&ct=clnk&cd=1&gl=bg&client=firefox-a)The total number of the employed in BDZ and NKZI is more than 30.000.The government has been trying to reduce them but the syndicates are opposing to such a measure and threaten that they will block the whole railway network.Now the formal reason is that Kremivkovtsi bankrupted.The railways are literally untouched since 1989 onwards and remain one of the most unreformed sectors.