In the third quarter of the current year, the Bulgarian economy grew slightly faster than expected, by 2.4% in real terms compared to the third quarter of last year.
„Economic activity in the nine months on the demand side was driven by final consumption, which increased by 4.3% in real terms with a dominant relative share of 78.1% in the GDP structure. Against this background, investments grew microscopically by 0.2% and, based on their more than four times smaller share of 17.0% in GDP, did not contribute to either growth or decline in the economy. In turn, exports slowly fell by -1.3%, while imports slightly increased by 1.4%. Despite this dynamics, net exports remained positive“, commented the chief economist of one of the major banks in our country, Emil Kalchev.
On the production side, growth was driven mainly by services and construction. Services grew significantly in the first nine months - by 3.0% (in real terms) and pulled GDP up, due to their huge relative share of 64.2%. Against this background, industry reported a minimal increase in production by 0.7% with a more than three times smaller relative share in GDP of 17.3%. Agriculture contracted by -5.0% with a share of only 2.8%, and construction (3.5% of GDP) increased its production the fastest by 3.3%. “It should be recalled that construction involves a certain part of the industry that supplies it with materials, which is why its importance is not limited to its direct relative share in GDP.“, added Kalchev.
Trump's re-election has a tangible impact on the global economic outlook. UBB expects him to implement his program, including imposing higher tariffs and military spending on NATO partners. This will create a stagflationary shock in the US and the EU.
“For Bulgaria, the direct impact of the new tariffs will be weak, since trade with the US accounts for about 2.0-2.5% of total trade. A stronger indirect impact is possible through a deterioration in the economic situation, e.g. in Germany, and due to changes in the dollar exchange rate against the euro. The state budget deficit in our country is still very difficult to plan at 3.0% of GDP, and armaments spending is already about 2.0% of GDP. Their increase could mean an excessive budget deficit, torpedoing membership in the eurozone.“, Kalchev also said. The pace of prices was low in November as well. Thus, harmonized inflation remained at 2.0% (compared to November last year), and consumer inflation (according to the national methodology) slightly accelerated to 2.1% (1.8% for October). The overall slowdown in inflation is expected to continue.