Over the third quarter of 2021 the Economic activity indicator in Bulgaria (EAI) decreased but continued to signal an expansion

Over the third quarter of 2021 the Economic Activity Indicator (EAI) decreased but continued to signal an expansion. Preliminary estimate of the Q3 composite indicator pointed to a lower but positive value of 0.8, down from 1.4 in Q2. EAI was driven by its cyclical component, while its long-term position remained almost neutral for two quarters in a raw. More important, the negative cyclical fluctuations after the pandemic crisis did not reduce the long run level but improved it instead to 0 in Q3.

All variables made positive impact on the EAI cyclical position and country’s economic activity, respectively. The decline in the indicator mainly reflected some easing in the manufacturing growth momentum and business confidence in the sector. The country’s manufacturing activity was in line with external dynamics. Nevertheless, most of the variables remained at high levels but the relatively stronger base in previous period due to the recovery from the pandemic resulted in EAI slowdown in Q3. Monetary variables and employed did not have a significant effect on the indicator’s movement.

The current EAI cyclical fluctuation followed the dynamics of the euro area cyclical position. In Q3 2021, the value of €-coin fell on a quarter earlier resulting from the negative contribution of the slowdown in the manufacturing sector. The latter was partially offset by the positive contributions made by the re[1]covery in demand and inflation connected with the gradual recovery in services and easing of the restrictions adopted to contain the pandemic.

The preliminary estimate for EAI in Q3 also indicates a slowdown of real GDP growth rate.