Households are expected to start changing their behavior, while we will see even less and less postponement of purchases of goods for long-term use

The growing number of indications for a favourable solution to the crisis with the sovereign debts of the eurozone countries and particularly the diminishing risks from Greece abandoning the Euro will send a clear positive signal to the Bulgarian companies and households. According to the forecasts presented at a meeting of the Euroclub at the Bulgarian Chamber of Commerce and Industry (BCCI) by the chief economist of the bank Mr. Kristofor Pavlov the risk-taking appetite of the investors will start recovering and the capital flows to the country will start growing, although initially very slowly. „In the first place, however, the improvement in the external environment will influence the Bulgarian economy through the channel of expectations “, summed up Pavlov.

According to him, this year the companies will gradually start unfreezing their investment projects and this will have a stabilizing effect on the employment rate. The expectations for a sustainable growth in the employment rate, however, are focused rather on the period after 2013. „Of course, the number of jobs is an indicator, which is lagging behind and a sustainable growth in the employment rate, in our opinion, could be seen only from 2013 onwards. The households will also start changing their behavior, while we will see even less and less postponement of purchases of goods for long-term use. In line with the increase in the final aggregate demand in the economy, the demand for loans will also start growing compared to the unsatisfactory low rates at the moment. The ideas about what rate of financial indebtedness could be viewed as sustainable will evolve in a positive way, thus leading also to reducing the pressure on the households and especially on the private non-financial corporations for continuing to lower their indebtedness.“, thinks Pavlov.

According to the UniCredit Bulbank economists, the GDP in qoq terms will accelerate from the rates near to zero at the beginning of the year to 0.5% – 0.7% in the last two quarters of 2012 thanks to the consolidation of the external demand. The projections for the whole year foresee a GDP growth of 1.5%, which however will mean economic slowdown compared to 2011 when GDP increased by 2%.

„The first few months of the year will put the economy of the country to the test“, thinks Kristofor Pavlov. The deterioration of the external conditions will have a negative impact on the export. Apart from that, the problems in Europe will put additional pressure for shrinking the financial indebtedness in the corporate sector as well as will lead to a temporary turnaround of the process of stabilization of the labour market.

An obstacle to the recovery of the Bulgarian economy in 2012 will be the continuing drop in the prices of homes. And this is an indicator of the yet weak end-consumer demand by the households.

„We can expect two or even three years in which the Bulgarian economic growth will remain below its potential rate with alternating periods of speeding up and slowing down of the recovery rates”, says also the analysis of UniCredit Bulbank. The main reason behind this is that the processes of indebtedness reduction in the corporate non-financial sector as well as the adaptation of the real estate market to the new realities will require more time because of the huge imbalances with which these two sectors of key importance for the country’s economy faced the start of the crisis.

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