SOFIA (Bulgaria), March 17 (SeeNews) - Bulgaria's gross domestic product (GDP) grew by a real 6.2% in 2007, slightly slower than a revised 6.3% increase recorded a year earlier but beating forecasts by economic analysts, National Statistics Office (NSI) figures showed on Monday.
The growth figure was above analyst forecasts of growth of 5.7-6.0% last year but below the Bulgarian government's expectation of 6.4% full-year economic growth.
Analysts made the following comments:
AGATA URBANSKA, EMERGING EUROPE ECONOMIST AT ING BANK, LONDON:
Urbanska said data for the fourth quarter of 2007 was better than expectations of year-on-year growth of 5.9% and described the 6.2% full-year growth as good. Urbanska added:
“Composition, I think, is also better. So domestic demand growth is slower and the negative contribution from net exports is lower, so the composition of growth has also changed positively. And overall what sort of attracts attention is that second half of 2007 has seen a slowdown of private consumption and if this is sustained in 2008, that would be good because that would support maybe some improvement or at least no further worsening of the external imbalance.
"We have 5.7% year-on-year growth [for 2008]. Again some slowdown but still strong growth. The most important is composition and really what I would hope for is exactly that this pattern from the second half of 2007 is going to be sustained. So domestic demand is going to be slow and not that strong and so imports are going to grow slower and net exports' contribution to GDP is not going to be negative. So external balance is not going to suffer more. We are looking at current account deficit to remain at the same level in 2008 as it was in 2007.”
Bulgaria ended last year with a current account deficit of 21.6% of the projected GDP, up from 15.7% a year earlier.
IVAILO VESSELINOV, SENIOR EEMEA ECONOMIST AT DRESDNER KLEINWORT WASSERSTEIN, LONDON:
“GDP growth surprised on the upside in Q4’07, very much in line with the rest of the region, with activity accelerating sharply across the board at the end of last year. Although the notable slowdown in agricultural output that started in Q2 extended into the last quarter, it was offset by continued acceleration in industrial growth. In our view, this bodes well for the short-term outlook and suggests demand in key export markets remains relatively healthy for the time being.
"This will remain important, as the net contribution from trade remains strongly negative. With final consumption still the key driver for overall GDP growth, import consumption is set to remain elevated over the forecast horizon.
"The 2008 outlook remains largely unchanged, with the key risks being a slowdown in investments due to over-saturation in the construction and real estate sectors and a sizeable hit to demand in the eurozone from the global financial crisis. Against these risks, we expect that the government will loosen its fiscal stance, providing ongoing support to consumption and ensuring that overall GDP growth stays close to the 6.0% mark.”
DESISLAVA NICKOLOVA, MACROECONOMIC ANALYST AT RAIFEISEN research, SOFIA:
“We were very pleasantly surprised by the data, particularly by those for the fourth quarter of 2007, which were well above our revised forecasts [of year-on-year growth of below 6.0%]. Our full-year revised forecast was 5.5%, so growth of 6.2% is quite above that and actually they met our initial forecasts.
"The good surprise came mostly from industry. I explain it with the construction sector because data for industrial output for the fourth quarter of last year was not very hopeful. There was a certain slowdown in industrial output. I suggest that the growth [of 6.2%] came mostly from construction and continuing development of trade centres, big vacation areas and so on.
"For this year, despite the positive surprise, we expect growth to slow down and we hold on to our forecast of 5.5%, mostly because of the forecasts for slower growth in the whole of the European Union and the Eurozone in particular and continuing problems on global capital markets, which are not expected to calm down, at least by the middle of this year.
"Investment growth remains double-digit though slowing down, which is not the greatest news in GDP. But despite this, there are no grounds for troubles. The economy is growing. There is a rise in investments which exceeds the economic growth.”
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