Bulgaria - Overview
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The 2009 recession materialized in a 5.5% contraction of the GDP and an unemployment rate that has gone from 5.6% in 2008 to 12.3% in 2013. The economic growth has been close to zero in 2013 (0.5%), after a growth of +0.8% in 2012, in a very tough economic context due in particular to a succession of political crisis. However, growth could reach 1.7% in 2014 according to the EU.
Today enjoying relative financial stability and having one of the lowest debts on the continent, of only 19,4% of GDP in 2013, Bulgaria - since its entrance into the EU - has continued its rapid transition, which was however restrained by the 2011 European crisis. The Bulgarian authorities have now made fiscal governance a priority and the government has implemented an austerity plan to deal with the consequences of the crisis, capping state expenditure, limiting the fiscal deficit to 3% and lowering the public debt.
The country faces many other challenges, including problems of corruption within the administration, a weak judicial system and the spreading of organized crime.
The country has a skilled and inexpensive workforce. Nearly a third of the population works in the industrial sector. Bulgaria's main mineral resources include bauxite, copper, lead, zinc, coal, lignite (brown coal), iron ore, oil and natural gas.
Industry still depends on heavy manufacturing sectors (metallurgical, chemical, machine building), which were developed during the socialist period. However, the most dynamic sectors are textile, pharmaceutical products, cosmetic products, and now, the mobile telephone industry and software industry. The manufacturing industry accounted for 31.2% of the GDP in 2013. It currently employs 32.5% of the active population.
The tertiary sector contributes to 63.5% of the GDP and employed 61% of the active population in 2013.
Foreign trade overview
Bulgarian exports go mainly to Germany, Turkey, Italy, Romania, Greece and France. Bulgaria mainly exports semi-processed goods and unprocessed products. The country also produces and export coal, iron, oil and gas. But the most dynamic sectors are textile, pharmaceuticals, software and mobile phone technologies. The country's main imports are food products, fuel, energy and capital goods from Russia, Germany, Italy, Romania, Greece and Turkey. The rise in energy prices has made Russia the leading supplier of Bulgaria, followed by Germany and Italy.
Bulgaria's foreign trade was indirectly affected by the global economic crisis, insofar that Bulgaria's main partner countries, which are in majority European countries, reduced their orders. The current difficulties of the EU economies further worsen this situation, although Bulgarian exports have shown resistance and they are stagnating rather than regression. The case in point was Greece, which was severely affected by the financial crisis and, therefore, strongly reduced its imports from Bulgaria. Bulgarian foreign trade have resumed growth since 2012.
Bulgaria attracts a certain volume of foreign cash flows, but since 2009 their level has been badly affected by the global and European crisis, particularly in the sectors of construction, real estate, financial intermediation and manufacturing. Foreign direct investment fell notably due to the Greek crisis of 2011 and 2012, Greece traditionally being an important investor in Bulgaria. Moreover, the European crisis dried up capital flows significantly. Considering all the advantages that Bulgaria provides, notably its fiscal plan with one of the lowest tax rates in the area and its labor costs, the country remains well-placed for foreign investments to revive again in 2014. The revival will nonetheless only be driven by the improvement of the economic situation of the EU countries, particularly of Bulgaria's closest neighbors. In 2013, the inward flow of FDI totalled USD 1. 899 billion.
Information on the 2013 FDI influx in this region can be accessed in the Global Investment Trade Monitor published in January 2014 by the United Nations Conference on Trade and Development (UNCTAD).