Industry will first be released from the embrace of recession

Bulgaria industry will emerge from recession in early 2010, but GDP growth will remain in negative territory throughout the following figures. It predicts the chief economist of Bulbank Kristofor Pavlov round table „The way out of recession for South Eastern Europe – Challenges and engines. Moderator of the roundtable was Revoltella responsible for strategic analysis of the financial sector in CEE UniCredit Group.

Around the view that the corporate sector will bring the region from recession, united and other participants in the roundtable opened by Mr. Hampartzoumian, CEO of Bulbank. „We can not rely on a boom in foreign investment or a consumption boom, as seen in recent years. Eastern Europe but gradually became „produce hand“ of the West and this will help the region to benefit from more recent than expected economic recovery in the euro area, summarized Feratsi Mateo, an economist at UniCredit Group.

Hampartzoumian highlights the importance of infrastructure development in the region, not only in the form of highways, but also communications and technology of the 21 century. According to Pavlov, the Bulgarian economy will experience growth below potential over a longer period of time than other emerging markets in Europe because it was one of the countries that most actively participated in the recent boom in investment and consumption, where growth of domestic demand was financed by a rapid increase in the current account deficit and external debt.

„The rapid increase in costs placed under considerable pressure to existing resources in the economy, forcing the price level to rise. Bubbles emerged relating to real estate prices and the securities traded on the stock market. In the end, overheating of the economy led to increased vulnerability of the private sector in the wake of the collapse of Lehman Brothers, which marked the beginning of the worst phase of the global financial and economic crisis, „said Pavlov. Against this background, despite a significant decline recorded in 2008 and 2009, the rebalancing of the Bulgarian economy seems not yet completed and we expect, albeit with decreasing rate, GDP continued to shrink during the greater part of 2010 . However, the industry of the country will recover from the recession during the first half of 2010, says Pavlov. The main reason for this will be to restore the economy of the eurozone, which will be beneficial for export. Furthermore, in support of the industry and will be called. „Overturning the cycle of work in progress“, ie companies will have to increase their production to fill the stocks reduced as a result of reduced consumption due to the crisis in recent months.

Optimistic outlook for restoration of the industry does not automatically mean the recovery and economic growth, said Pavlov. He explained that although the industry will lead the exit of the recession there are several secondary effects of the crisis, are now landed on the economy. The combination of growing job losses, falling real estate prices and anemic growth of credit adversely affect consumer spending and investment, and will keep GDP growth next year in negative territory. Forecasts of economists of UniCredit Group are that Bulgaria will finish 2010 with growth of -2.5 percent of GDP.

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