Sat, May 26 2012

Bulgaria’s current account deficit shrinks threefold amid downturn

Tue, Feb 16 2010 10:23 CET

byDnevnik.bg

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Bulgaria’s current account deficit shrinks threefold amid downturn

Photo: Nadezhda Chipeva

Bulgaria’s current account deficit contracted almost threefold in 2009 against the background of the global financial and economic crisis, according to preliminary estimates by central Bulgarian National Bank (BNB).

At the end of December, the current account gap was 2.912 billion euro compared with 8.653 billion euro for the corresponding period in 2008.

The two figures account for 8.62 per cent of GDP for 2009 and 25.41 per cent for 2008.

Foreign direct investment (FDI) halved to 2.844 billion euro in 2009 against 6.549 billion euro for 2008. However, they covered 75.68 per cent of the current account gap against 97.66 per cent for 2009.

Slumping FDI was the first sign that the crisis was filtering into the Bulgarian economy in the summer and the autumn of 2008, fuelling negative forecasts by foreign investors. They pointed to the nagging current account gap and shrinking coverage as by investment as a major obstacle for the Bulgarian economy, which theoretically means soaring external debt and expenses to cover it.

But the projections by foreign analysts raised quite a few eyebrows with their Bulgarian colleagues, who predicted that the deficit would decrease, thus restoring coverage.

Overall, the balance of payments remained negative for 2009, with a 649 million euro deficit compared with a surplus of 674.2 million euro for 2008.

Source: Dnevnik.bg

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