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Bulgaria's current account deficit to reach 24%-28% in 2009

Date: 26.11.2008

The Chair of the Bulgarian Industrial Association (BIA) Bozhidar Danev said Monday the industrialists predicted the country's current account deficit would reach 24%-28% in 2009.

Thus, the deficit is believed to substantially greater than the 22% envisaged by the government in its 2009 draft budget.

The industrialists believe that to a great extent its increase would result from the withdrawal of foreign investors from Bulgaria over the global financial crisis.

Another factor which would impact negatively Bulgaria's current account deficit is the expected decline of exports.

According to Danev, the increase of exports that Bulgaria registered in 2007 and 2008 was due to the fact that global prices were high, while the country's products sold cheaper.

As the present financial crisis is expected to drive down the prices of commodities like metallurgic product, Bulgaria's exports are also going to decline.

Danev stressed the fact that 67% of all foreign direct investments in Bulgaria went for the financing of banking institutions, and for the purchase of real estate property. He stated that the financial crisis would decrease the real estate investments, which would affect the economic growth and the labor productivity.

The BIA Chair also said that because of the effects of the global financial crisis Bulgaria's 2009 draft budget should provide for lower inflation than currently envisaged.

Danev presented data showing that Bulgaria average gross annual wage rose by BGN 2 083 in the period 2002-2007, which is an increase by 67%.

He pointed out, however, that the increase in labor productivity in the same period was twice smaller than the wage growth. In 2002-2007 the surplus value per employed person increased by BGN 5 008, or by 34%.

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