Moody's praised Bulgarian economy
In its annual credit analysis, Moody's assesses the economic and institutional stability in Bulgaria as a moderate and emphasizes the sustainability of public finances in the country.
Agency review of economic growth from 2010 to the present and recognizes that economic growth in 2010 and 2011 due to the positive dynamics in exports, while domestic demand was depressed by the processes of debt repayment in the private sector and lower foreign capital flows.
In 2012, there was a recovery in private consumption and investment activity. According to Moody's expectations for 2013 and 2014 are for growth of GDP respectively by 1.2% and 2.4%.
The agency predicted that economic stabilization in the Euro area at the end of the year will result in a resurgence of exports, while private consumption will increase in imports. As a positive development is reflected ongoing diversification of exports and reduction of highly concentrated in the export of raw materials.
Experts predict in 2013 fiscal consolidation to slow down. Their expectations are based on assumptions about the increase in social transfers and capital expenditures and the impact on the revenue side of the budget by the still high unemployment, low growth in industrial production and domestic demand.
In 2014, analysts predicted the budget deficit to shrink minimum - up to 1.3% of GDP, despite the acceleration of nominal and real GDP growth, a significant improvement in the budget balance will be hampered by expectations of continued upward pressure on social spending.
The report recognizes that the process of labor market still inhibit a faster recovery in private consumption. Optimizing the cost of labor in sectors such as construction and industry is done by limiting the employment and not by reducing the compensation of employees. However, the report notes that the level of income in the economy is below the average for the Euro area.
The rating agency sets fiscal and monetary policies in Bulgaria as prudent and supervision of the banking system - an effective, which analysts said was an important factor in the banking system does not become a burden on the budget during the global financial crisis. Effective banking supervision has contributed to maintaining confidence in the country.
By Moody's assessed as low political risk in the country, but pay attention to the high social tension and the lack of a party, which enjoys a high public trust.
Resurgence of civil unrest can cause implementation of populist policies and even new elections. However, there is consensus between the major parties to maintain fiscal stability, low levels of government debt and the currency board system.
Source: bg-daily-news.eu
(05.07.2013)