BULGARIAN CHAMBER OF COMMERCE AND INDUSTRY

EUROCHAMBRES ECONOMIC SURVEY 2002

BULGARIA

PRESENTATION OF THE COUNTRY

Bulgaria is situated in the South-Eastern part of the Balkan Peninsula, and has a territory of 110,912 sq.km The country's population is 8,2 million, 3,2 million of them active – 1,741 men and 1,531 women.

In 2000 the Gross Domestic Product (GDP) of the country has reached 25,454 mln. BGN in current prices. It has been increased with 5.8 % as compared to the previous year.

The Gross Value Added (GVA), amounting to in 22,533 mln. BGN, in total covers 88.5 % of the Gross Domestic Product.

The largest share in the Gross Value Added – 57.7 %, are of the branches in the sphere of services, followed by the industrial sector – 27.8 % and the agrarian sector with 14.5 %.

The alterations of the Gross Value Added (at basic prices), are positive in the sphere of industry, with an increase of 17.6 %, and services with an increase of 16.8 %, followed by reduction in the agriculture with 5 %.

Structural alterations in the economy are also remarked with the increase of the share of the private sector in the Gross Value Added – from 65.3.7% in 1999 to 69.3 % in 2000.

The alterations of the private sector are really considerable - in the communications - with growth of 113.7 %, reprocessing industry – with growth of 51.3%, trade and repair +50.5 %, and agriculture with reduction 4.5 %.

 Administrative Territorial Division

The territory of the republic of Bulgaria is divided into 278 municipalities and 28 districts, groupped into 6 “planning economic regions”.

 MAIN REZULTS

Over the past year, we have persevered with an ambitious adjustment and reform strategy based on a currency board arrangement (CBA). Incomes policy for state enterprises has been implemented strictly, with the total wage bill of the worst performing companies continuing to decline. Notable achievements in structural reform during 2000 included the sale of our largest bank (Bulbank), the launching of the new pension and health care systems, the break-up of the electricity monopoly into its generation, transmission, and distribution components, and the removal of a large number of licensing and regulatory requirements.

Our sustained policy efforts have paid off, as we are now experiencing a robust economic recovery. Led by exports, GDP growth in 2000 is estimated to have reached 5,8 percent. This has helped to create a large number of jobs in the private sector, although unemployment remains high at 18 percent, in part reflecting labor shedding in the public sector. The rapid growth is remarkable as it was achieved despite a summer drought and high international energy prices.

These factors, together with a weak euro, raised inflation and the current account deficit above the originally projected levels, but both remain under control. While consumer price inflation reached 11.4 percent during 2000, this did not weaken our competitiveness, as strong productivity growth helped our exports to increase by 20 percent in U.S. dollar terms.

 ECONOMIC INDICATORS

This study covers summarized information for the results of the participating companies for the year 2001 vs. 2000 and their expectations for the business environment in the next year.

The interviewed companies have different forms of ownership and operate in the production and service sectors.

TOTAL TURNOVER

In 2001, as compared to 2000, the interviewed companies with positive changes in their sales incomes prevail over the companies with negative results. The expectations for 2002 show prevailing positive results, the balance values (29,4 p.p.. in 2001) growing to 54,1 p.p. in 2002.

50,4 % of the interviewed companies report a growth in their sales income for 2001 vs. 20,9 % of those, which suffer a decrease. The companies expecting a growth of sales income for 2002 are 61,9 % vs. 7,8 % with negative expectations.

The companies with positive results for 2001 is 54.3 %. in the production sector, and 43.0 %. in service sector.

The share of companies expecting an increase in their sales income grows to 66.3 % in the production sector vs. 53.7 %. in the service sector.

The highest percentage of positive expectations under this indicator belongs to the companies of the South-West Region (66.3 p.p.), which surpasses the average balance value for the country (54.1 p.p.).

DOMESTIC SALES

The data for 2001 show a prevailing increase of sales on the domestic market with an average value of the indicator (18.4 p.p).

The expectations of the companies for 2002 vs. 2001 under this indicator are positive – from balance value (18.4 p.p.) to (48.2 p.p).

The companies in the industrial sector have higher expectations for increased profits for 2002 (52.5 p.p) vs. 40.3 p.p. of the interviewed companies of the service sector.

On regional level, expectations for 2002 for the domestic market with values higher that that on national level have been registered again the South-West Region (57.6 p.p.).

 EXPORT SALES

In national aspect, in 2001 there was a rise in the income from sales on the international market, the average value of this indicator being 15,6 percent points.

For 2002, the expectations for the income from sales on the international market show a rise, with an average value of the indicator (47,9 percent points).

The industrial enterprises expecting a rise in their income from exports for 2002 are 64,2 % vs. 49,8 % for the previous period.

In the service sector, expectations for an increase in the exports for 2002 were registered for 35,1 % of the interviewed vs. 23,7 % for 2001.

Increased external sales income were reported by the companies from the South- West Region 60.6 p.p.The positiv expectations of the companies from this region reach the maximum value of 65.2 % of all interviewed by region.

The lowest sales income from international markets for the country for 2001 was in the North West Region (-15.0 p.p.) vs. 15.6 p.p. on national level .

On national level, the expectations for increased sales in the international markets indicate 47.9 p.p. for all regions for 2002.

The results of the interviews following the indicator sales income from the domestic and international markets among the companies from the service and production sectors show a clear tendency for a rise in the sales income for the current period and in the expectations for 2002.

The analysis of these data, both on national and on regional level, shows that the production sector companies are orientating their activity towards the sale of their products on the international market to a much greater extent than the service sector companies.

EMPLOYMENT

The results from the research show that in 2001, as compared to 2000, the employment in the two sectors – production and services – has remained constant for 49,4 % of the interviewed, while for 18,1 % of them there was a deterioration. For 2001, 32,5 % of the interviewed indicate positive changes.

The expectations for 2002 are optimistic:

In national aspect, the balance numbers indicate positive tendencies for employment, the average values of the indicator growing from 14,4 percent points in 2001 to 28,2 p.p. in 2002

Compared to the other regions in the country, most pessimistic are the employment expectations in the North-Western Region, which is related to the lowest sales income there.

INVESTMENT

Comparing the results for 2001 (balance value 24,9 percent points) with the expectations for 2002 (balance value 40.0 p.p.) for the investments made and planned, we are witnessing a certain optimism. The companies reporting and expecting positive changes are 40.9 % and 46.8 % respectively. Those who do not report or expect any change in the amount of investments for 2001 and 2002 are respectively 43.1 % and 46.4 %.

The companies reporting negative results for the present period and expecting a decrease in the number of jobs for the future are 16.0 % and 6.8 % respectively.

The highest percentage of envisaged investments comes from the North-West region 47.8 p.p. and from the North - East region – 47.5 p.p.

The share of investments that have been made and of positive expectations for investments is considerably bigger in the production sector – 29,0 p.p in 2001 and 42.0 p.p. in 2002.

 BUSINESS CONFIDENCE

The economic environment (the ongoing process of transsformations in our economy) has reflected on the results under this indicator on national level.

The prevailing opinion of the companies for 2001 concerning the conditions for development of economic activity is that there were no considerable positive changes in the environment as compared to 2000.

In percentages, the biggest share (55,8 %) of the interviewed both of the production and service sectors indicate that the conditions for business have not changed in 2001.

Their expectations for 2002 under this indicator are positive. From pessimistic for 2001 – balance value 0,9 p.p. their expectations for positive changes rise for 2002, reaching a balance value of + 56.0 p.p.

On national level, the data under this indicator show that the companies from the South-West Region are the most optimistic for the amelioration of the conditions for business in the country in 2002.

The companies, which reported a deterioration of the conditions for economic activity for the current period 2001 are 21.6 % vs. 7.8 % of those expecting their deterioration in the future.

The fact that the share of those reporting deterioration of the conditions for business at present is more of twice smaller that the share of companies with pessimistic expectations for 2002 indicates that the companies from both sectors have a positive disposition concerning the improvement of the general business environment and are involved in the process of establishment of a market economy.

The positive expectations of the companies are mostly connected with some forthcoming changes aiming at the improvement of conditions for business, i.e.:

 METHODOLOGY

The participation in this research was voluntary and anonymous. The involved companies were selected according to the Eurochambres’ instructions. The questionnaire was distributed among 600 representatives of the real sector of the economy in the country, as 425 of them answered all questions. From the inqured companies, 76,7 % make export; 64,9 % are in the industrial sector, 35,1 % of the companies make services.

 11 December 2000

Back   HOME