27.8.2007

CURRENT ACCOUNT GROWING

Bulgaria’s current account is estimated to grow to 20 per cent of gross domestic product (GDP) by the year end, a gap that is matched, nearly, by only the economies of Hungary and Poland, the Economist Intelligence Unit (EIU) reported in the week beginning August 20. By 2011, however, the deficit is to narrow to 17.2 per cent, the think-tank said.

Although the new forecast is a reduction of its own forecast of a 26 per cent increase, issued in early July, the EIU still believes that the main threats to economy remain the untamed credit growth and the current account deficits.

At the same time, the growth in Bulgaria’s GDP is said to slow from the projected 6.2 per cent for 2007 to four per cent in 2011, the main reason driving this is the shrinking population.

By 2011, Bulgaria is also likely to see positive developments in the labour market with the average wage reaching $322 by 2011. The figure is still well below the $937 average salary in Central and Eastern Europe.

On the downside, the volume of foreign direct investments (FDI) is projected to decrease to 4.2 per cent of GDP in 2011. This year FDI is projected to be 9.2 per cent of GDP.

The main stumbling blocks to the Bulgarian economy remain the high level of red tape and the inefficient legal and judicial systems, alongside rife corruption.

The EIU reiterated Bulgaria should pinpoint development in research and development, alongside investments in information and communication technologies.

Source: sofiaecho.com