Fri, Mar 19 2010

Bulgarian households lose 83 billion leva in recession

Wed, Oct 21 2009 09:52 CET byDnevnik.bg 1477 Views 4 Comments
Bulgarian households lose 83 billion leva in recession

Unemployment has been rising everwhere, including the UK

Bulgarian households have seen 83 billion leva wiped off their incomes after the property market burst, reducing prices by about 20 per cent.

This represents 130 per cent of the nation’s gross domestic product (GDP), said Kristofor Pavlov, chief economist with UniCredit Bulbank.

Speaking at a Euromoney forum on the economic crisis, Pavlov explained that hard times have prompted households to save more and consolidate debts.

Savings currently account for about six to seven per cent of Bulgarians’ disposable income. About 70-80 per cent of households' financial assets are parked with deposits and so domestic demand would not help the economy recover, Pavlov predicted.

Unemployment is expected to peak in 12 months and the crisis will hit hardest in 2010, Pavlov forecast.

He said the Bulgarian economy would pull itself out of recession in the second quarter of next year but recovery would be painful.

UniCredit calculated that Bulgaria’s GDP would contract by 2.5 per cent in 2009, dragged down by the services sector.

The rebound will be spearheaded by the corporate sector and industry, according to Pavlov. Infrastructure projects will be the engine behind the rebound and a full absorption of European funding allocated to Bulgaria until 2013 will bolster GDP by four per cent, he added.

Comments

Anonymous Valeri Wed, Oct 21 2009 21:27 CET
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It's bad everywhere. That photo up there isn't BG you know...

Anonymous Mikael/sweden Wed, Oct 21 2009 20:43 CET
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Well said, expat.

The construction sector will be dying for another 3 years. The tourism industry will not start until there is something to offer them.

Anonymous expat Wed, Oct 21 2009 17:15 CET
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"...He said the Bulgarian economy would pull itself out of recession in the second quarter of next year but recovery would be painful."

I will be very much interested if and how this will happen - pulled itsef out of recession. I strongly hope he is right, but I have deepested doubts on this. What industry will be the driver for this, construction (hardly), service (fist have to improve quality), tourism (very unlikely, because of overbuilding and low service quality), industry? (too low productivity). and all this in combination with a strong EUR begged currency...
I fully agree it will be very, very painful and not only in 2010 but also the upcoming years....

Anonymous Ivane Wed, Oct 21 2009 12:27 CET
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This is a very simplified way to price losses. It suggests that liquid money has disappeared while in fact reference is made to the value of real estates, which has been traded on a small scale and has been heavily overpriced anyway in this country. It is also not direcly related to GDP losses, as one can understand later from your message.

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