Our economy over the past week

Bulgarian economy continues to shrink. In this week have already been published and the official data of the NSI, under which for the first time in the new millennium, our country registered two consecutive quarters of decline in GDP (yoy). The news is hardly unexpected, but still cause strong response and appropriate comments. To the decline in GDP, we can add many other indicators, but perhaps sufficient to mention here that unemployment continues to rise, to understand the situation at least at first sight has not changed much and things soon get worse.

However, there is cause for optimism. All these data reflect what is happening in the past months, which is important, but at the same time tells us much about the evolution of the crisis by the end of the year, and thereafter. Our expectations for the coming months should be formed not so much a similar type of data (for the first half of the year), but rather by new government policies which could have a serious impact.
Not accidentally, the news that the Bulgarian government has contracted a serious cost reflected in the international arena (Wall Street Journal) and draw attention to our country. It is this news is very important because it can reassure foreign investors, which was quite shaken by the folly of the old government in the last months of his reign. Plan „Stanishev“ did not achieve anything except to Propylaea much of our money – the main objective to provide employment fail.
Contraction of expenditure is already happening, but this week and learned the news that „this is the maximum. Diankov Simeon said it costs more this year can not be narrowed, as this would already constitute a danger to our economy. This Speaking is more than questionable. The bulk of government expenditures (which are folded or bent, have not record) are not only ineffective, but completely unnecessary. „Fear can be cropped, just to maintain some kind of search (ie to support various indicators such as GDP) is completely unfounded. This is like pour money into a bridge between Haskovo and Dimitrovgrad, which is completely pointless, but do it to keep any demand and provide jobs. The truth is that if an expense is meaningless (or ineffective) it must be done either in crisis or not.
Amid all this information and news about our economy, all sides continue to wallow questions like „What happens to the crisis“ and „When will I be okay?“. At least in my opinion quite interesting months ahead in which the hem will do it, yet we will think we are worse. That sounds a little strange, but it is very likely to happen.
Firstly, many of the effects of the crisis came late. The decline in orders and limited access to credit are major issues facing each company, but they resulted in immediate bankruptcy. Companies can use various mechanisms to „postpone the inevitable, do it with any extension of credit, forced leave or simply delay any possible benefits (including wages). However, most of these firms will be forced to closed, which will be reflected in higher unemployment. I’ve already seen, but it is very likely to reach its peak exactly in the first months after the summer.
This means that from now until year-end effects of the crisis may become more visible (especially for those businesses will close or remain unemployed), but on the other hand it is very likely to start and reverse processes revitalization. That is, to gradually return to foreign investment, to increase trade to revive lending (lower rates) and to begin to implement new ideas. In other words, until the end of the year, our economy can again be moved, but the effects will be visible as early as the beginning of next. A more relaxed 2010 is possible, but the government must respect the line of „clear rules and less costly.“ This type of policy would be much more successful than any anticrisis plan.

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Peter Ganev, IME