According to the Chief Economist of the bank, Mr. Kristofor Pavlov, the GDP of Bulgaria is forecast to reach its pre-crisis level in the last quarter of 2021
Ms. Raluca Popescu, Director of Corporate and Investment Banking of UniCredit Bulbank, was the host of the joint event organized by UniCredit Bulbank and Confindustria Bulgaria “A conversation about business with partners”. Her Excellency Giuseppina Zarra, the Ambassador of Italy to Bulgaria, Mr. Roberto Santorelli, CEO of Kuminiano Friut and Chair of Confindustria Bulgaria, Ms. Mila Razsolkova, Head of Compliance Department of UniCredit Bulbank, and Mr. Emiliano Steinfl, Head of the International Center of UniCredit Bulbank, took part in the event.
“We find it important that UniCredit is the first choice of Italian business in Bulgaria, too. Despite the difficulties, our primary objective in the previous year was managing to continue offering the best services and the same high value added to our corporate clients. We succeeded in staying constantly open to business and supporting our clients, no matter the market changes and disruptions. We are happy that today we can speak with confidence about a new stage and look towards more investments and important projects for the European market happening with the support of UniCredit,” shared Raluca Popescu, Director of Corporate and Investment Banking.
The Chief Economist of UniCredit Bulbank, Mr. Kristofor Pavlov, declared to the Italian companies in Bulgaria that Bulgarian economy is expected to recover relatively quickly from the consequences of the COVID-19 pandemic. He presented a macroeconomic analysis of the environment in Bulgaria. According to him, there are two prerequisites for a fast recovery in Bulgaria.
“First of all, growth before the pandemic was not accompanied by accumulation or deterioration of existing macroeconomic imbalances, which would put the economic growth on an unstable trajectory even before the pandemic,” explained Kristofor Pavlov. He added that prior to the crisis in 2008-2009, there was a boom in the real estate sector funded by a boom of loans which resulted in a rapid growth of indebtedness in the private sector of the economy. That is why households and companies had to limit their expenses, but now consumption is expected to recover quickly.
According to Kristofor Pavlov, the second reason for a fast return to a normal economic situation is the fiscal stimulus that in 2020 amounted to 3% of Bulgarian GDP. Together with the expected stimuli in 2021, the growth of pensions and salaries in the public sector, and the funds allocated to Bulgaria under the European Recovery and Resilience Plan, fiscal stimuli of slightly over 20% of the GDP of Bulgaria are planned for a period of approximately 6 years.
More investments and fewer direct fiscal transfers for households and companies are envisaged for Bulgaria. A large part of these investments will support Bulgaria’s transition towards green economy, digitalization and automation of processes, which will compensate for the fact that Bulgaria has been falling behind in these key spheres of future competitiveness,” added Kristofor Pavlov.
Mr. Pavlov explained that the recovery of investments would be led by investments in infrastructure, to be supported by the planned financing in the EU Recovery and Resilience Facility. Growth in residential building construction is also envisaged, since the prices of residential properties remained very stable during the crisis.
“The recovery of investments in machines and equipment will be the most time-consuming. It will begin with the projects that were planned prior to the beginning of the pandemic. New projects will have to wait until the available production capacity is reduced and the perspective for the different sectors of the economy is clearer,” explained Kristofor Pavlov.
He also discussed the possible obstacles to a fast recovery, e.g. the potential deterioration of the political situation. The slow pace of coronavirus vaccination in Bulgaria is an issue. If this trend continues, we risk facing another big wave of cases in the autumn, which will close our economy again.
The Chief Economist of Bulbank commented on the possibility to have production transferred from Asia to Eastern Europe.
“We are witnessing very poor appetite of companies to create new production capacity or transfer it in Europe. This particularly applies to automobile industry. In fact, there are no such projects,” said Kristofor Pavlov and added that having a large automobile construction project realized in Bulgaria is fairly improbable.
“Production of chemical products and of pharmaceutical products are among the sectors that seem to be expressing some interest in transferring production capacities close to Europe. We think this is a trend that could be beneficial for Bulgaria, because these two sectors are well-developed in our country. We could say, that Bulgaria has traditions in the production of particular products in these spheres,” added Kristofor Pavlov.
Additional media information:
Ekaterina Ancheva, tel +359 (0) 2 9264 963, flbufsjob/bodifwbAvojdsfejuhspvq/ch