Balance Of Payment Current Account Deficit At USD Mn In January- September, Or 0.8% Of GDP

Transcription

1 Balance Of Payment Current Account Deficit At USD Mn In January- September, Or 0.8% Of GDP BULGARIA: CURRENT SITUATION, TRENDS AND DEVELOPMENT OPPORTUNITIES November, 2002 Bulgaria's Gross External Debt Was USD10,526 Mn At The End Of October Or 67.9 Of GDP November Inflation Reported At 0.2 % m/m Industrial Output Grows 3.2% In October On A Y/Y Basis November Unemployment Was 16.8% The net financial result of the banking system in October increased by 19% and reached BGN 240.1mn

2 I. EXTERNAL SECTOR 1. Current Account Balance Of Payment Current Account Deficit At USD Mn In January- September, Or 0.8% Of GDP According to the Central s bank statistical data, in September the current account was with negative balance, with a USD 28.6 mn deficit. The main reason for that is the deteriorated trade balance. Exports in September declined 5.2% y/y and amounted to USD mn at FOB prices. At the same time imports increased 13.4% and stood at USD mn. As a result, the trade deficit was USD mn, up USD 77.0 mn y/y. Current account deficit for January- September amounted to USD mn, or 0.8% of GDP, compared to USD mn, or 3.1% of GDP, at the end of September That was mainly due to the improved trade balance and the decrease in global interest rates.despite the worsened results in September, trade deficit for the first nine months of the year declined USD mn y/y. In January-September exports exceeded imports by USD mn (6.2% of GDP), while a year earlier the deficit was USD billion (7.9% of GDP). Exports in January- September increased 5.2% y/y and amounted to USD billion at FOB prices. Imports amounted to USD billion, up 2.0%. Bulgaria's main trade partners within the EU were Germany, Italy and Greece. Foreign direct investment for January- September amounted to USD mn, compared with USD mn for the yearago period. The smaller amount of investment was due to the negative net result of intracompany credits. According to the Central s bank data for the first nine months of the year banks have reduced their FX deposits abroad by USD mn. For the third quarter of the year, however, banks' deposits abroad have increased USD mn. USD mn, Preliminary Data Aug Aug Prel. Rev. Sep Jan- Aug Jan Sep, % y/y A. Current Account Balance Trade Balance Balance on Goods Balance on Services -Travel revenues , Balance on Income Current transfers B. Capital and Financial Account FDI, net Net Errors and Omissions Overall Balance (A+B+C) External Debt Bulgaria's Gross External Debt Was USD10,526 Mn At The End Of October Or 67.9 Of GDP At the end of October 2002, Bulgaria's gross external debt was USD mn (67.9% of GDP), down by 92.1 mn from USD10,618 mn at the end of 2001, according to the Central s bank data. Bulgaria's long-term debt exceeded USD9.109 mn, or 86.5% of the total external debt and short-term debt was over USD1.416 mn. At the end of October, the external debt of the public sector was USD8.190 mn (52.8% of GDP), down by USD438.9 mn from the end of 2001 when it was USD8.629 mn (63.7% of GDP). The Government's external debt was USD7.848 mn at the end of October, down by USD163.6 mn from the end of 2001 when it was over USD8.011 mn. The external debt of the private sector amounted to USD2.336 mn, up by USD346.8 mn from the end of 2001 when it exceeded USD1.989 mn. Private commercial banks owed foreign financial institutions USD344.9 mn, and the external debt of private non-financial enterprises amounted to USD1.991 mn. At the end of October a total of 43.1%, or USD4.537mn of Bulgaria's gross external debt was in the form of securities, 46.7%, or USD4.916 mn in the 2

3 form of financial loans, 7.8%, or USD821.9 mn in the form of commercial credits, and 2.4%, or USD250.6 mn in the form of deposits made by non-residents. In January- October 2002, the payments made in settlement of the external debt totaled USD1.638 mn, or 10.6% of GDP, including USD1.330 mn in settlement of principal, and USD308.6 mn in settlement of the interest. The payments made in settlement of the external debt of the public sector totaled USD1.334 mn by the end of October, of which USD1.055 mn in settlement of principal, and USD279 mn in interest. The debt settlement payments made in the like period of 2001 totaled USD1.080 mn, USD304.3 mn of which were paid by the private sector. Private commercial banks paid USD116.4 mn towards the settlement of their debts, compared to USD151 mn in the same period of Non-financial private enterprises paid USD187.9 mn for the same purpose. The new credits received in January-October 2002 added up to USD1.028 mn, or 6.6% of GDP, up from USD796.5 mn in the same period of The amount includes USD495.5 mn that went to the public sector (48.2 % of the sum total), and USD533 mn (51.8 %) borrowed by the private sector. Private commercial banks got USD142.3 mn in loans and deposits, and non-financial private enterprises received a total of USD390.7 mn in loans. II. REAL SECTOR 1. Inflation November Inflation Reported At 0.2 % m/m According to the National Statistics Institute data consumer price inflation was 0.2% in November and cumulated to 2.5% since the beginning of the year. In November, non-food prices rose 0.1%, mass-catering prices 0.4%, and services 0.8%. Food prices declined 0.2 %. The low inflation since January has been due mainly to a cheapening of foods. Between January and November, food prices went down by an aggregate 6.8 %, while non-foods rose 9.6%, services 11.9%, and mass catering 3.5%. Last month rail fares rose 3.8%, water supply 2.8%, postal services 6.5%, gaseous fuels for household use 2.7%, propane butane automotive fuel 1.9%, and electricity 1.1%. Automotive petrol cheapened 0.2% and diesel fuel 0.6%. The prices of the 100 essential goods in the survival consumer basket went down 0.1% in November but increased 0.2 per cent since January. Nov, Nov, Nov, Weight % Change m/m y/y ytd CPI Food Non-food Services Catering Industrial Output Industrial Output Grows 3.2% In October On A Y/Y Basis In October industrial production marked a 1.6% growth from the previous month. Since the beginning of the year it grew by 3.2%, according to the National Statistical Institute data. Output in the extracting industry grew by 5.1% from the previous month, and by minus 3.4% in the first ten months of the year. In the processing industry the respective figures are 0.9% and a 4.2% and in electricity and heat energy, gas fuel and water supply 3% and 1.8%. Industrial sales in October were 0.7% down from the previous month and in the first ten months 1.5% down from the same period of the previous year. Sales shrank by 1.8% and 1.9% respectively in the processing industry, and grew by 9.5% and minus 0.3% respectively in the extracting industry. Sales in electricity and heat energy, gas fuel and water supply grew by 3.7% and 0.9% respectively. Sales in radio, TV and telecommunications equipment marked the steepest rise in January-October %, followed by stationery and computing equipment with 35.4%. Sales in motor vehicles and trailers dropped by 19.8% and in 3

4 the publishing, printing and recording industries by 15.1%. Real changes (%) October, у/у January- October,%, y/y Industrial sales Extracting industry Manufacturing Utilities Industrial Output Retail Sales Whole Sales Sales in domestic trade and services (including repairs of cars, personal items and household goods) increased 2.9% between January and October, compared to same time last year. Sales in wholesale trade increased by 3.2% and in retail trade 2.9%. In October alone, sales in this sector were 9.5% higher than in The growth is 11.6% in wholesale trade and 3.7% in retail trade. In retail trade, the increase is most pronounced in textiles, clothes and shoes (7.7%), followed by household appliances (7.2%), food, liquors and cigarettes (5.7%). There was a 5.4% slump in sales of pharmaceutical and medical goods. 3. Unemployment November Unemployment Was 16.8% Unemployment has dropped 10% since the beginning of this year, according to the Labour and Social Policy Ministry data. November unemployment stood at 16.8%. Jobless persons that month totalled 625,000, down by 19,000 from October 2002 and down by 32,000 from November Unemployment in November 2002 was at a three-year low. In September 2002, employed persons were 30,000 more than a year earlier. Job vacancies posted so far this year total 223,000 (4.5% up from last year). Between January and November 2002, the number of registered jobless persons entitled to benefits was 25% smaller, in average, than last year. In November 2002 they were 38,000 fewer than in November This is due to the fact that economic adjustment and the liquidation of loss-making enterprises are nearing completion. Among registered jobless persons in November 2002, some 112,000 were entitled to unemployment benefits and 513,000 were not. Nearly 320,000 persons have been jobless for more than a year. A national programme called "From Social Benefits to Creation of Jobs" will create over 120,000 jobs for long-term unemployed persons in Municipalities have bid to create 90,000 jobs. The central programme administration has received project applications from 263 municipalities nationwide. The remaining 30,000 jobs will be created under projects of the Ministries of Agriculture and Forestry, Environment and Waters, and Culture, as well as the National Social Assistance Service. Municipalities, employment associations, government ministries, NGOs and privately-owned companies have offered to co-finance the national programme with a total of BGN61 mn, which will be used to cover current and capital expenses. III. MONETARY SECTOR As of end of November EUR/USD rate was or USD/BGN At the end of December expect the BGN to closed at 1.91/1.92 versus USD reflecting EUR/USD exchange rate on the international markets through the BGN/EUR peg. BGN BGN/USD Exchange Rate November effective average BIR was 3.76%. The real interest rates estimated on a monthly inflation rate were: for short-term BGN loans BGN / USD

5 0.56% and for one month term deposits in BGN 0.07% on a monthly base. According to the Central's bank statistical data the average margin of short-term loan interest rates on annual effective base was 5.24%. The average weight effective interest rate on short-term loans in BGN was 9.0%, in EUR 9.44%, in USD- 5.26%. The average weight effective interest rate on long-term loans in BGN was 14.19%, in EUR 10.16%, in USD 10.46%. The average effective interest rate on one month term deposits was 3.09% on BGN deposits, 2.21% on EUR and 1.51% on USD deposits as well. The average effective interest rate of the demand deposits respectively was 0.35% on BGN, 0.53% on EUR and 0.58% on USD deposit base. % 10% 9% 8% 7% 6% 5% 4% 3% 2% 1% 0% Лихвен диференциал Кредити-Осн.лихва According to the Central's bank statistical data current monthly BGN trading volume of inter-bank deposits for the overall banking system was BGN mn. Placed resources in EUR and USD were respectively mn and mn. The average price of placed resources in BGN sharply declined from 3.15% to 1.0% influenced mainly by the price of overnight deposits (0.73%) and deposits up to 3 days (1.08%). For the same period the average price of placed resources in EUR was stable and keep levels on 3.33% and in USD recorded monthly decline from 1.74% to 1.35%. Annual average yield on Treasury bills remains flat at 3.76% for treasury bonds. The annual average yield of medium and longterm bonds for the overall banking system decreased from 6.83% to 6.39%. At the beginning of December the Central bank Кредити-Депозити exchanged a small amount of USDdenominated ZUNK bonds into EURdenominated bonds of the same kind. The outstanding stock of the ZUNK bonds is around USD 300mn. The stock of domestic credit retained a double digit annual growth based on the rapid credit expansion to private enterprises and households. The gross credit stock picked up by 18.7% y/y as of end of November amid 53.0% decrease in credits to the government entities and 42.5% rise in credits to real sector and public. Financing to enterprises increased by 42.6% y/y, including state enterprises, which hold a small share near 6% in the overall credits to enterprises. The banks expansion in the retail sector was also significant with a rise by 42.4% y/y as a result from more aggressive policies both in consumer and mortgage lending. The credit stock widened to 22.4% of projected GDP versus 19.7% for the same period last year Динамика на новите кредитите в БС According to the Central's bank statistical data as of end of November newly granted domestic BGN loans for overall banking system amounted to BGN mn. For the same period the newly granted loans in EUR and USD were respectively mn and mn. Money supply (M3) grew at a rate of 15.1% y/y as of end of November. On a monthly base, the money supply grew by 0.02% in November, retaining good economic growth outlook. The share of FX component in M3 declined from 40.8% as of end of October to 39.9% as of end of November but the greatest БС BGN БС USD БС EUR

6 part of a drop came from depreciation of the USD, which is still the most popular currency in this country. The monetarisation of the economy based through the relative share of M3 to GDP grew to 44% versus 39.9% for the same period last year Динамика на депозитите в БС According to the Central's bank statistical data as of end of November BGN deposits for the overall banking system reached BGN mn. Thus, the BGN deposits in the banking sector grew by 3.48% m/m and 11.49% y/y. The BGN equivalent of the FX deposit base for the banking system reached BGN mn as of end of November. Thus, the reported monthly decrease in the BGN equivalent of the FX deposit base for the system was 2.13% as a result of the USD depreciation. On a year to year base the overall banking system recorded nominal growth by 14.85% БС BGN БС валута IV. BANKING SECTOR The net financial result of the banking system in October increased by 19% and reached BGN 240.1mn According to the Central s bank data receivables from other financial institutions declined 5.89% in a month, and the credit portfolio of the banking system increased 2.56% at the end of October. The net financial result of the banking system in October increased by 19% and reached BGN 240.1mn. An interesting fact to mention is that the three biggest institutions in Bulgaria and the branches of the foreign banks operating here incorporated more than BGN 16 mn provisions against losses from credits in their profits. Credits made up 40.2% of banks' assets. The debts of state-owned and private companies, the public and the budget to banks totaled BGN billion at the end of October. The loans of private companies increased 2.06%, of state companies, 5.16%. Credits for individuals and households rose 4.05%. The assets of the banking sector increase slightly, 0.2% m/m and amounted to BGN billion at the end of October. The deposit base of credit institutions also increased: 0.78% to BGN billion. The share of the banks in Group 1 (DSK Bank, UBB and Bulbank) in the profit of the sector was 59.95%. These banks preserved their positions in relation to credits, deposits and total assets: they held 43.85% of the assets, 45.51% of the attracted deposits, and provided 35.64% of the credits in the system. The information contained in this bulletin is derived from public institutional sources and United Bulgarian Bank makes no representation as to the accuracy or completeness of such information. This material is not intended as an offer or a proposal for the purchase or sale of any financial instrument. Additional information on the theme researched in this report is available upon request. Contact: Chief Economist P. Tsekova phone (359 2) cekova_p@sof.ubb.bg, Analyst N. Racheva phone (359 2) racheva_n@sof.ubb.bg 6