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EU-Report Accession Bulgaria
Following the economic crisis in 1996/97 with negative real GDP growth, the currency board
arrangement introduced in July 1997 has helped to stabilise the economy and to achieve real GDP
growth of close to 4% on average since 1998. Inflation came down from above 1,000% on average in
1997 to 9.8% on average since then. Fiscal discipline kept the deficit below 1% of GDP in all
years, which gradually brought down public debt. A slowly rising share of private investment in
GDP and substantial inflows of foreign direct investment indicate an improving business climate.
Foreign direct investment has also been the main source of an orderly financing of high current
account deficits. However, as a consequence of structural reforms, but also sometimes of their
late implementation, unemployment has kept on rising until 2001 and is slowly declining since
then.
Table 2.1: Main Economic Trends (Sources: Eurostat. National sources. OECD
external Debt Statistics)
| Main
Economic Trends |
| Bulgaria |
|
1997 |
1998 |
1999 |
2000 |
2001 |
Average |
2002 latest |
| Real GDP growth
rate |
percent |
-5.6 |
4.0 |
2.3 |
5.4 |
4.0 |
2.0 |
3.2 Q1 |
| Inflation
rate |
|
|
|
|
|
|
|
|
| - annual
average |
percent |
: |
18.7 |
2.6 |
10.3 |
7.4 |
9.8 |
6.4 July1 |
| -
December-on-December |
percent |
: |
1.6 |
7.0 |
11.3 |
4.8 |
6.2 |
5.5 July |
| Unemployment
rate |
|
|
|
|
|
|
|
|
| - LFS
definition |
percent |
13.7 |
12.2 |
14.1 |
16.3 |
19.9 |
15.2 |
17.6 Q2 |
| General government
budget balance |
percent of GDP |
-0.3 |
1.3 |
0.2 |
-0.6 |
1.7p |
0.5p |
|
| Current account
balance |
percent of GDP |
10.0 |
-0.5 |
-5.3 |
-5.5 |
-6.0 |
-1.5 |
|
|
Million ECU/EUR |
923 |
-55 |
-642 |
-760 |
-9402 |
-290 |
-424 Jan.-June3 |
| Gross foreign debt of
the whole economy |
percent of exports of goods and
services |
165.9 |
165.0 |
183.8 |
132.0 |
: |
: |
|
| - debt export
ratio |
Million ECU/EUR |
9,211 |
8,1724 |
9,451 |
10,083 |
: |
: |
|
| Foreign direct
investment inflow |
percent of GDP |
4.8 |
4.2 |
6.2 |
7.9 |
5.1 |
5.6 |
|
| - balance of payments
data |
Million ECU/EUR |
445.1 |
479.3 |
756.3 |
1,084.3 |
775 (c) |
708 |
256 Jan.-June5 |
| Sources: Eurostat. National
sources. OECD external Debt Statistics |
|
-
Moving 12 months average rate of change.
-
Source: Website of the National Bank.
-
Source: Website of the National Bank.
-
series break as a result of some technical changes to the definition.
-
Source: Website of the National Bank.
|
Substantial progress has been made with the restructuring of the economy and privatisation.
Enterprises representing more than half of all state-owned assets have been sold. New
privatisation procedures were put in place in April 2002 to provide clearer rules and greater
transparency for the remaining 2,000 firms or so which are majority state-owned. A strategy for
the liberalisation of the electricity sector was started in 2002 with substantial price increases
and the privatisation of distribution companies. The conditions for business in Bulgaria have
improved although substantial efforts are still required to enhance the efficiency of the public
administration and the judicial system regarding corruption, red tape, tax and customs procedures
and bankruptcy rules. The largely foreign-owned banking sector is developing in terms of credit
growth and savings deposits, and only one major state-owned bank remains to be privatised. The
capital market is still underdeveloped.
Average per capita income is low at only 28% of the EU average (in purchasing power
standards). However Bulgaria made good progress in the catching-up to EU income levels. The
employment rate of the working-age population fell from 54.5% in 1997 to 50.7% in 2001. The
unemployment rate increased from 13.7% of the labour force to 19.9%. More than 60% of the
unemployed are long-term unemployed. Unemployment rates for men have increased slightly more than
for women, and almost 40% of the persons under 25 years old are unemployed. Regional income
differences are small, ranging from 23% to 28% of the EU average, with the exception of the
Southwest region, which includes Sofia, where the figure is 36.5% (data for level-2 statistical
regions in 1999). Regional differences in unemployment are more pronounced. While in the
Southwest region the unemployment rate was 9.7%, in all other regions it was above 20%, reaching
up to 32.8% in the Northwest (data for level-2 statistical regions in 2001).
Table 2.2: Main Indicators of Economic Structure in 2001
| Main
Indicators of Economic Structure in 2001 |
| Population
(average) |
Thousand |
7,915 |
| GDP per
head1 |
PPS |
6,500 |
|
percent of EU average |
28 |
| Share of
agriculture2 in: |
|
|
| - gross value
added |
percent |
13.83 |
| -
employment |
percent |
26.74 |
| Gross fixed capital
formation/GDP |
percent |
17.8 |
| Gross foreign debt of
the whole economy/GDP5 |
percent |
77.4 |
| Exports of goods &
services/GDP |
percent |
55.7 |
| Stock of foreign
direct investment |
|
|
|
Million EUR |
2,1516 |
|
EUR per head7 |
272 |
| Long term unemployment
rate |
percent of labour force |
12.6 |
|
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Figures have been calculated using the population figures from National Accounts, which
may differ from those used in demographic statistics.
-
Agriculture, hunting, forestry and fishing.
- Data
refer to 2000.
- Data
refer to 2000.
- Data
refer to 2000.
- Data
refer to 1999.
-
Figures have been calculated using the population figures from National Accounts, which
may differ from those used in demographic statistics.
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© EU Commission -- 2003-03-30
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