Bulgarian economy shrinks by 10% in Q2 2020

Bulgaria’s economy declined by 10 per cent in the second quarter of 2020, according to preliminary data announced by the National Statistical Institute (NSI) on September 4, exceeding the statistics body’s earlier flash estimate that put the drop at 9.8 per cent.

This was the second-largest decline on record, just short of the 10.1 per cent recorded in the first quarter of 1997, when Bulgaria’s economy cratered following a string of poor policy decisions by the socialist government of the time, which led to the collapse of the Bulgarian lev, hyperinflation and shortages.

Compared to the same period of 2019, the gross domestic product (GDP) shrank by 8.5 per cent and was, in real terms, 27.4 billion leva, or 14 billion euro.

NSI gave no reason for the drop and made no reference to the impact of the Covid-19 pandemic, which prompted Bulgaria to declare a State of Emergency on March 13, shutting down parts of its economy as it introduced social distancing and anti-epidemic measures.

The State of Emergency remained in force until May 13, when it was followed by the declaration of an epidemic. That declaration has been extended several times, most recently to the end of September.

NSI’s preliminary data showed domestic consumption decline by 2.1 per cent compared to January-March, compared to a 0.1 per cent drop in the previous quarter. Year-on-year, domestic consumption was 0.4 per cent higher in April-June (down from the 4.1 per cent annual growth rate recorded in the first quarter).

Gross fixed capital formation shrank by 7.9 per cent in the second quarter, compared to 1.2 per cent decline registered in the first three months of the year. In annual terms, gross capital formation in April-June fell sharply, down 14.1 per cent compared to the same period of 2019 (in the first quarter, the year-on-year drop was 5.6 per cent.)

Exports in the second quarter were down by 22.1 per cent, while imports were 20.4 per cent lower, but Bulgaria still recorded a trade surplus of 754.9 million leva, or 2.8 per cent of GDP. Compared to the second quarter of last year, exports were down 19 per cent and imports shrank by 19.1 per cent.

Bulgaria’s Cabinet has set a 3.3 per cent economic growth target this year in the Budget Act macro-economic framework, after recording 3.4 per cent growth in 2019. The Budget revision in April, made necessary by disruption caused by the Covid-19 pandemic, did not amend the growth target, but the European Commission’s summer forecast projected that the Bulgarian economy would contract by 7.1 per cent this year.

(Photo: Pedro Moura Pinheiro/flickr.com)

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