Official figures released by Bulgarian National bank (BNB) confirmed forecasts by most economists that as the global economic crisis deepens, the country’s current account deficit will shrink.

In the first two months of the year, the gap contracted to 649.3 million euro (1.8 per cent of projected gross domestic product) compared with 1.464 billion euro (4.3 per cent of GDP) for the same period of last year, a 55.6 per cent decrease.

The fall was most strongly driven by a shrinking trade deficit, which fell by 501.8 million euro.

Imports slowed by 32.3 per cent, faster than exports that decelerated by 27.4 per cent.

Bulgaria imported goods to the amount of 2.389 billion euro in January and February 2008 against 3.528 billion euro for the same months of last year, which saw a 25.2 per cent rise.

Exports, on the other hand, were estimated at 1.689 billion euro in comparison with 2.326 billion euro for January and February 2008, when they grew by 31.1 per cent.

The capital account totalled 164.8 million euro, which represents a 13-fold increase year-on-year. In February, it was fully covered by foreign direct investments (FDI), which were estimated at a preliminary 226 million euro versus a deficit of 224 million euro for February alone.

Analysts welcomed the figures, with Georgi Angelov, economist with the Open Society Institute, saying the unless the government makes encouraging foreign investments its top priority, adjustment will inflict more serious damage.

Source: Dnevnik.bg