Bulgarian economy expanded by 2% yoy s.a. in Q1 2015. GDP growth was largely driven by net export, while domestic demand was relatively weaker compared to the previous quarters. The latter came mostly on the account of lower government expenditures. The stronger consumer confidence led to an increase in household expenditures, fixed investments also went up. GVA increased by 1.7% yoy s.a. with the major positive contribution from services sector.
The signals from the short-term business statistics were mixed in the beginning of the second quarter. On the one side, the growth of industrial production and turnover, and retail sales decreased, while construction production index turned negative. At the same time, the business climate kept improving on the back of more favorable assessment of the present business situation of enterprises in all sectors.
Positive employment developments became more pronounced in the beginning of 2015, as the overall employed number in Q1 2015 went up by 0.8% yoy. The unemployment rate continued on the decrease in yoy terms. It stood unchanged over the previous quarter at 10.6%, down by 2.4 pps compared to Q1 2014.
The average wage growth in the first quarter of 2015 accelerated to 7.9% yoy in nominal terms, while the HICP-deflated real wage growth came at 9.8% yoy, mainly driven by developments in the private sector.
Real labor productivity for the total economy also gathered speed, up 2.3% yoy, with improvement reported in all economic sectors. However, its growth remained below the one of the compensation per employee, which contributed to the increase in unit labor costs, up by 2.7% and 2.3% yoy in nominal and real terms, respectively.
The negative annual rate of inflation decelerated further to -0.3% as of May, as measured by the HICP. Meanwhile, the national consumer price index was positive for three consecutive months so far, up by 0.9% yoy in May.
With the trade balance improvement offsetting the decline in services and the virtually unchanged primary and secondary income balances as a share of GDP, the current account balance reached EUR 194.6 mln or 0.5% of projected GDP in January-March. The capital account surplus increased to 0.7% of GDP in Q1 2015 due to the investment subsidies from the European institutions to the General government, while the accumulated deficit on the financial account stood at 3.2% of GDP.
Gross external debt (GED) amounted to EUR 39.38 bn (92.1% of projected GDP) as of end-March, up by 6% yoy. Transactions related to repayment and issuing of new debt were the most important flows.
Consolidated budget balance was positive on cash basis at the end of April, accounting for BGN 1 066.6 mln or 1.3% of projected GDP. The budgetary position improved significantly compared to the same period last year, when the consolidated budget was on deficit of BGN 864.5 mln (1.1% of GDP).
This issue of the Monthly Report on Bulgarian Economy HERE