BULGARIAN ECONOMIC TOP NEWS DIGEST
WEEKLY REPORT ( 18 - 23 DECEMBER 2009 )
Sections/headline briefs:
MACROECONOMY:
· LG Electronics sees 12% rise in 2009 sales in Bulgaria, targets at least same growth rate in 2010
· Bulgarian Christmas shoppers will still spend on electronic goods
· EIB to allocate EUR 1 billion for national co-financing of EU operational programmes
· Expert: Bulgaria's tourism sector to stabilize in 2010
· Bulgaria to receive E 115 M from EU for Road E-79
· US chamber of commerce: Bulgaria deserves to join the eurozone
· Bulgaria to apply for ERM 2 in March
· Bulgaria plans to cut VAT to 17% in 2011
· Bulgaria opens tender for consultant for Belene nuclear project
· Bulgaria in talks with Japan, Spain to sell Kyoto credits
INVESTMENTS:
· Bulgarian property market lacks foreign investors
· Electra earmarks EUR 650 M for renewable energy in Bulgaria by 2012
· New shopping Mall to open in Bulgarian capital in March 2010
· Low-risk investments to remain in focus in 2010
COMPANIES:
· Bulgaria starts privatization of cigarette monopoly Bulgartabac
· Debts bring companies to bay
· Siberia Airlines to fly from Plovdiv
· Hamburg International launches Sofia-Berlin flights
· Spectrum Net plans acquisitions
· Over 180 construction companies will be given funds under agreement
THE CRISIS:
· World Bank: Bulgaria, Latvia young firms worst hit by crisis
· 95% of Bulgarian companies saw drop in sales in 2009
· Railroad cargo transportation falls 28.6% y/y in November
· Crisis is in people's minds rather than in economy
Articles:
MACROECONOMY:
LG Electronics sees 12% rise in 2009 sales in Bulgaria, targets at least same growth rate in 2010
LG Electronics expects a 12% annual rise in sales in Bulgaria this year despite the crisis and will aim to keep its growth rate at least at the same level next year, senior officials said on Friday. We will be very active, very aggressive in mobile phones and consumer electronics sales and we can revise forecasts upwards in the year's second half," LG Electronics consumer electronics marketing and sales manager for Bulgaria Ivan Ivanov told reporters. Company officials provided no sales figures. According to estimates the worst of the crisis will last until the end of June and then the economy will start recovering, which in turn will help the market to partly recover from the serious drop this year, Ivanov said. The local electronics market is estimated to fall by 20% this year as compared to 2008. The market is estimated at approximately 1.0 billion levs ($0.73 billion/0.51 billion euro) annually, Ivanov said, without making clear if the estimation refers to this or last year. A small share, of almost one percent, of the market's value is in the grey economy, he added. The mobile phones market was the worst hit by the crisis as its annual drop for 2009 is estimated at between 30% and 40%. Wholesale prices of cell phones were cut by an average 15%, LG Electronics marketing and sales manager for Bulgaria Dimitar Valev said. LG Electronics says it has a 30% market share in consumer electronics, which ranks it the second-largest player on the local market. It will aim to raise the market share to 35% next year. In mobile phone sales, the company has achieved a 50% rise succeeding to get a 10% market share, which ranks it third on the local market. We plan a 50% increase in market share on this segment, to 15% next year," Valev told SeeNews. In the home appliances segment, the company has a market share of some six-eight percent as domestic consumers are rather European-oriented and prefer to buy appliances produced by European manufacturers. We cannot expect a serious rise in this market share due to high eco fees which clients pay," Ivanov told SeeNews. LG Electronics (www.lge.com), headquartered in South Korea, was set up in 1958. It is a global leader and technology innovator in consumer electronics, mobile communications and home appliances, employing more than 84,000 people. It has five business units - Home Entertainment, Mobile Communications, Home Appliance, Air Conditioning and Business Solutions - and reported global sales of $44.7 billion (31.1 billion euro) in 2008. LG Electronics opened its trading unit in Bulgaria in March 2006.
Bulgarian Christmas shoppers will still spend on electronic goods
2009 was not good for IT in Bulgaria. All markets have decreased and only Internet usage showed some positive development. The Bulgarian electronics retail market has shrunk by 20%, according to figures compiled by LG Bulgaria and released on Friday. This crisis will, however, not affect Bulgarians doing their Christmas shopping, as 40% of them plan to spend at least as much as they did in 2008. LG Bulgaria enjoyed a 12% increase in sales in that year. The two most profitable sectors - mobile phones and electronic appliances - showed significant growth in market share, reaching 10% and 30% respectively.All IT companies hope that in 2010 the crisis will be over and positive results will pop up.
EIB to allocate EUR 1 billion for national co-financing of EU operational programmes
The European Investment Bank (EIB) will provide EUR 1 billion to Bulgaria to resolve the shortage of national copayment under the operational programmes of the European Union (EU), said transport minister Aleksandar Tsvetkov. According to the agreement, the projects financed under the operational programmes will get 20% from the state budget, with the balance covered by the Cohesion Fund. The EUR 2 billion Transport programme will scoop up the lion’s share of the copayments, including EUR 990 million for the construction of 213 kilometres of highways and 69 kilometres of first-class roads. The National Railway Infrastructure Company has estimated it would be unable to cover 80.9% of the cost of the overhaul of the railway link between Sofia and the country’s second largest city of Plovdiv. Pen should be put to paper with the contractor by the middle of 2010. Connecting Plovdiv and Bourgas, on the southern Black Sea coast, is estimated at EUR 164 million, with building works scheduled to begin next year. A further EUR 111 million is needed to upgrade the railway between Sofia and Dragoman. The project should start in 2010.
Expert: Bulgaria's tourism sector to stabilize in 2010
Bulgaria’s tourism sector is going to see a stabilization in 2010, according to Rumen Draganov, Chair of the Institute for Analises and Estimates in Tourim.Draganov told the Bulgarian National Radio Friday that the country’s tourism business hit the bottom of the economic crisis in the winter and summer of 2009, and was going to see growth in 2010, or is at least going to keep the 2009 levels.“The Bulgarian tourists will three times more than the foreigners during the winter season. There are Bulgarians who go skiing or snowboarding 20 times or more throughout the winter. We expect to see that Bulgarians will be the majority of tourists and travelers over the winter,” Draganov said.The Institute for Analises and Estimates in Tourism expects a 20% growth of German tourists and an 8% growth of Russian tourists in 2010.
Bulgaria to receive E 115 M from EU for Road E-79
The European Commission has decided to allot EUR 115 million to Bulgaria for repair of the E-79 international road, regional development and public works minister Rossen Plevneliev said during a visit to the town of Montana, northwestern Bulgaria. The road should be fully repaired by 2013. The reconstruction of the sectors of the road between the towns of Bela and Ruzhentsi and Mezdra and Botevgrad has already started.
For four months now the government has absorbed two percent of the funds under the operative program for regional development, set against only 0.36% for the past three years, the minister said.
US chamber of commerce: Bulgaria deserves to join the eurozone
"Bulgaria deserves to join the Eurozone because of its achievements and that privilege could not be denied," said the chairman of the American Chamber of Commerce Anthony Hassiotis in his address to PM Borissov. "The numbers are categorical - Bulgaria's fiscal policy is one of the best in Europe and we should be proud of it," underlined Hassiotis. According to him Bulgaria's accomplishment is unique and this country copes with the situation better than the rest of European states. Businessmen noted that in a few months the incumbent government assisted Bulgarian business more that the accomplished in the previous years. "The cabinet's approach to business is open and friendly and many problems are solved quickly and transparently," said Hassiotis.
Bulgaria to apply for ERM 2 in March
Bulgaria's Finance Minister Simeon Djankov has announced that the country will apply in March next year to join the exchange-rate mechanism, the two-year currency stability test prior to euro adoption, and seek to switch to the common currency by 2013.Bulgaria initially planned to apply to join the exchange-rate mechanism in November, but delayed it till next year after all member states submit their convergence programs, which contains the mid-term goals of the fiscal policy.Joining the exchange-rate mechanism would bring Bulgaria closer to the umbrella of the euro region and the protection of the European Central Bank and is conditional on whether the new government will succeed to restore Brussels trust.The lev is already linked to the euro in a currency board that keeps the Bulgarian currency at 1.9558 to the euro. Joining the exchange-rate mechanism may allow the lev to fluctuate by as much as 15 % around a central band, though the central bank has said it will leave the lev tightly pegged to the euro through the duration of the two years.Bulgaria's entry in the eurozone, initially scheduled for 2010, has been set back as it is conditional on continued fiscal prudence and lower inflation.
Bulgaria plans to cut VAT to 17% in 2011
Bulgaria's prime minister has announced that Value-Added Tax (VAT), which currently stands at 20%, could be cut to 17% in 2011.Boyko Borisov spoke at the official lunch, organized by the American Chamber of Commerce in Bulgaria, dedicated to the country's plans for accession to the eurozone by 2013 and the efforts that the state is making to achieve this key goal.“Bulgaria's accession to the eurozone will release huge financial resources, which are currently used to guarantee the stability of the currency board. This is money, which can be used in the health care system or invested in the construction of highways,” Borissov said.He pointed out that Bulgaria is the only country, whose outlook was lifted to stable from negative by Standard & Poor's Ratings Services due to its strong track record of prudent fiscal policy and low gross debt.Bulgaria has the lowest personal and corporate income tax in the EU at 10%, which was introduced at the beginning of 2008, replacing the previous system, which combined several different tax rates - between 20 and 24%, depending on income.After coming into office, the new Bulgarian government announced it plans to keep unchanged the flat income tax rate and cut the Value-Added Tax (VAT) from the current 20% to 18% in 2010 and by a further 2% by the end of the term of office of Prime Minister Boyko Borissov’s administration.The country will apply in March next year to join the exchange-rate mechanism, the two-year currency stability test prior to euro adoption, and seek to switch to the common currency by 2013.Joining the exchange-rate mechanism would bring Bulgaria closer to the umbrella of the euro region and the protection of the European Central Bank and is conditional on whether the new government will succeed to restore Brussels trust.The lev is already linked to the euro in a currency board that keeps the Bulgarian currency at 1.9558 to the euro. Joining the exchange-rate mechanism may allow the lev to fluctuate by as much as 15 % around a central band, though the central bank has said it will leave the lev tightly pegged to the euro through the duration of the two years.
Bulgaria opens tender for consultant for Belene nuclear project
The Bulgarian Energy Holding (BEH) has announced that the tender for a consultant to help it decide how to proceed and attract new investors for the planned Belene nuclear power plant will be invited at the end of January.Notices about the procedure will be published in two of the most prestigious media in the world – the Financial Times and The Economist, as well as online on BEXH corporate site.Bulgaria's new centre-right government, which has put the 2,000 megawatt Belene under review due to rising costs, came up with the idea to hire a new consultant after German utility RWE walked out of the project due to funding problems and Sofia decided to redesign it in the next year to attract new investors.Russia's state nuclear company Rosatom announced in December that it is ready to finance the multi-billion nuclear project in the Bulgarian Danube town of Belene, which has stalled over lack of funding.This was Russia's second offer to pour money into Bulgaria's second nuclear plant Belene after Russian Prime Minister, Vladimir Putin, gave the green light to a EUR 3,8 B loan at the end of May.Bulgaria's new government of the center-right GERB party has said however that it is not willing to provide any state guarantees for loans and is yet to decide whether to scrap or push ahead due to purely economic terms.RWE's departure from Bulgaria's new Belene nuclear plant put extra pressure on government to find new shareholders while it redefines the scope of investment it needs.The new governmen plans to cut its shares in the project from 51% to 20-30%, which will still allow the country to keep its blocking quota.Belene's reactors are to be of the Russian VVER-1000 class, while the Western companies are providing instrumentation and control systems.State power utility NEK has a majority stake in the plant.
Bulgaria in talks with Japan, Spain to sell Kyoto credits
Japan and Spain have expressed interest in purchasing Bulgaria’s greenhouse gas emission quotas assigned under the Kyoto Protocol, the environment ministry said yesterday. The proceeds from the sale can be spent exclusively on green investments including energy efficiency, renewable energy and other projects that will help the country curb its carbon dioxide footprint. The ministries of environment, finance and economy are currently discussing a legal mechanism that will incorporate spending plans and projects that will be financed by the proceeds from the sale. Negotiations with prospective buyers will begin early next year as ministries put the finishing touches on the legal mechanism. Environment minister Nona Karadjova has already said the proceeds to be raised from the possible emissions trading deals will be allocated to prefab concrete home insulation projects. Preliminary estimates of the environment ministry show Bulgaria has accumulated around 200 million surplus permits for the period 2008 to 2012. Assigned Amount Units (AUUs) currently trade for EUR 9-11, the ministry said.
INVESTMENTS:
Bulgarian property market lacks foreign investors
Bulgarian real estate prices in over 20 cities and towns have seen a decline in value of up to 28% in the third quarter of 2009, compared with the same period the previous year.About 21 000 residential units were completed and became available on the market in 2008. Another 15 000 new units were constructed and put on the market in 2009, according to the Bulgarian National Statistical Institute (NSI).Real estate agents based in Bulgaria report that there is a shortage of cash available to the local market, and that foreign investors, who have been responsible for a large proportion of the recent construction boom, are not as active at the moment.Foreign investment in Bulgarian real estate between 2006 and 2008 accounted for more than EUR 2 B compared with EUR 300 M in the previous three years.However, there are signs that the market may be beginning to move. Real estate companies are reporting a small increase in property inquiries and in completed deals.A spokesperson for Address Real Estate has estimated that the overall decrease in transactions for 2009 will amount to about 35% compared with 2008. Although the bottom has almost been reached, prices are expected to fall even further in 2010.
Electra earmarks EUR 650 M for renewable energy in Bulgaria by 2012
Spain’s energy holding Electra has earmarked a total of EUR 650mn for the development and the acquisition of renewable energy projects in the country by 2012. The company is targeting mainly wind-energy projects. A total of 700 new jobs will be opened. So far Electra has bought wind parks with total capacity of 480 MW in southern Bulgaria , a 10 MW unit for electricity production from biomass in the central part of the country, a biodiesel production factory with annual capacity of 30,000 tons near the northern Danube city of Vidin . It plans to place its equity in local energy projects on the bourse in Spain by end-2010 and to invest all raised funds from the IPO in Bulgaria . Electra plans to develop the wind-energy projects in the country in strategic cooperation with another company. The launching of the energy producing units of Electra is to take place in 2012-2013. Electra approves of the intention of the government to impose a temporary 6-month moratorium on projects for renewable energy until the national plan for their development until 2020 and its environment assessment are drafted. We remind that the local chamber of the photovoltaic energy producers has estimated potential losses in the tune of EUR 1bn if the discussed moratorium on renewable energy projects is approved.
New shopping Mall to open in Bulgarian capital in March 2010
The newest shopping mall in the Bulgarian capital – Serdika Center – is going to be opened on March 16, 2010.This has been announced by its manager, Atanas Radev, as quoted by the Dnevnik Daily. More than 96% of the spaces in the new mall have already been rented.The total investment in the project amounts to EUR 210 M. The investors are the Austrian Sparkassen Immobilien and ECE Project Management.Serdika Center has 51 000 square meters of commercial space and 32 000 square meters of offices. It is located on the Sitnyakovo Blvd. It will have 220 stores, the largest ones being & Cloppenburg, Technopolis, Piccadilly, Zara, Humanic, NewYorker, Reserved, Galleria Scandal.In November 2009, a worker died in a labor accident on the construction site of the Serdica Center, which led to an investigation into the labor conditions there.
Low-risk investments to remain in focus in 2010
Most profitable investments in 2010 will be stocks and consumer goods, but still Bulgarians will remain conservative and will prefer lower-risk and safer investments, a research by the Dnevnik Daily revealed. If the positive scenario for Bulgarian economy comes true in 2010, the most profitable investments will be stocks and shares of collective investment schemes, UniCredit Bulbank broker Bozhidar Bozhkov commented for Dnevnik. Nevertheless it is expected bank deposits to remain Bulgarians’ favorite investment, followed by investments in mutual funds.
COMPANIES:
Bulgaria starts privatization of cigarette monopoly Bulgartabac
Bulgaria’s Privatization Agency announced Friday an open tender for selecting a consultant for the privatization of the state-owned cigarette monopoly Bulgartabac.The application forms costs BGN 2 000, and can be purchased within 35 days after the publication of the tender decision in the State Gazette. The deposit for participation in the tender is BGN 5 000, and must be transferred to the Privatization Agency account.The deadline for submitting an application is 5:30 pm on the 40th day since the publication of the tender decision.The requirements for the eligible candidates state that they should be international investment banks which are in the top 20 of the League Tables of Financial Advisers in 2007-2009 published by Merger Market or Thomson Reuters.The candidates must be a leading a consultant of at least one privatization deal of a tobacco company in the last three years, and to have experience with privatization deals. In addition, they should be familiar with Bulgarian law, should have a team of proper legal and economics specialists, should not be in a legal dispute with the Bulgarian state, and should not be in liquidation.
Debts bring companies to bay
We will bid farewell to 2009 with a total indebtedness of nearly BGN200 billion, Bozhidar Danev, chair of the Bulgarian Industrial Association (BIA), believes. The prognoses will come true if the average annual growth of the intercorporate indebtedness of the last years remains unchanged. The worst thing, however, is that the state (municipalities included), keeps on producing indebtedness and becomes a major debtor because of the services that the business has been provided to it, but it has not managed to pay them. According to BIA, the state has to pay some BGN2 billion worth of delayed VAT reimbursement and unpaid public orders. The sums, however, are hardly to be correct enough since there is a number of finished projects that have no invoices for certain completed activities. If the companies do it, they will also have to pay a tax to the state, which has ordered the service in question, but has not paid it. And while the big companies have reserves and manage to maintain their operations even under such conditions, the small-size companies that have realized public orders are now brought to bay. For them, crediting has also been impeded and they therefore count on the regular payments from the state in order to be able to settle accounts with their suppliers and employees. The vicious circle is thus closed, while the avalanche of indebtedness is gaining speed. The companies are crediting the state, which is pushing them to bankruptcy, while they don't dare to sue it. Alas, no government has so far taken adequate measures on the issue. In Bulgaria, the stable and high economic growth of the last years keep on going hand in hand with such a headlong pace of the indebtedness, which remained unchanged also in 2008. This is what data of BIA's annual survey, which encompassed companies of the non-banking sector as at end-2008, revealed. The year of 2008 was characterized by a high 6-% growth of the Gross Domestic Product, as well as by a high investment activity, supported by a relatively stable price of the credit resources. As a result, the indebtedness proportion to financial institutions increased significantly. At the end of 2008 they reached BGN160 billion, with an absolute increase growth of 31.47% or BGN38.265 billion. As compared to 2004, the sum has marked a 2.9-fold jump by BGN104.7 billion. After in 2007 the indebtedness marked its record-high of 50.09%, the next year brought a certain acceleration and even a slight decrease of -5.7 percent. This process is easy to explain considering the country's shrunk production as a result of the financial crisis in Europe (our main trade partner), as well as in the United States. And because of this, there are fewer orders to our export-oriented companies, which, in turn, affect their suppliers and subcontractors. But it doesn't stem at all from a better financial discipline in the country. The intercorporate indebtedness kept on increasing in 2008 (by 23.8%), reaching almost BGN90 billion. It is up by 71% compared to debts to financial institutions. According to many financial analysts, debts between companies are growing because their debts to banks are decreasing. The banks themselves have more stringent rules pertaining to collections and because of this everyone prefers to begin squaring accounts with them. For this reason, many of the companies don't have at hand the funds needed for the gradual repayment of their mutual debts. The problem is that they cannot simultaneously produce and dismiss employees. Their revenues are flagging and, according to some analysts, they have shrunk by 70% on an annual basis. The situation is particularly alarming for collections of companies, which belong to a group or are related to associated firms or joint ventures. Their balance sheet as of December 31, 2008 read their receivables totalled BGN33.3 billion. The sum accounts for 37% of the total intercorporate indebtedness and it has significantly jumped by 27% (nearly BGN7 billion) from that registered in 2007. The risk here is that the companies wait to get money from "internal" group entities. If the crediting doesn't open and there are not enough orders, some of these companies may remain with no resources for repayment and thus impede the operations of the entire group. The indebtedness' dramatic growth in 2007 and 2008 (against an expected decrease of 6.3% of the GDP in 2009) puts our economy in extreme jeopardy and call in question its rapid revival. The economic environment is quite harsh also as a result of the sharp increase of the bank credit prices in 2009. The average interest rates jumped to up to 11.2 percent. And every potential loan receiver has to know that this price needs a further 3% of expenditures on guarantees, insurances, servicing, etc. Thus, the credit price grows to 14% on the average. There is hardly any business, which enjoys such revenues so as to venture and look for loans against such prices. Moreover, we don't have to skip the fact that the bulk of the companies of the non-financial sector are decapitalized. Their debts as at December 31, 2008 were bigger by 72% as compared to their own capital. Extremely alarming is the situation at those companies that are listed on the stock exchange. The significant devaluation of their securities in 2008 will additionally affect their rating, as well as their developmental potential and, indirectly, their credit portfolio. At the end of 2004, the companies' sales turnover was equal to their debts. Three years later, in 2007, they flagged by 11%, while in 2008 the "deficit" was already 25 percent. This means that the companies will not be able to repay debts through their production activities, especially under the conditions of a negative growth. This picture, no doubt, affects the entire banking system since the credit charges are devaluating. This means the loans extended from banks cannot be entirely repaid. The country's poor productivity and the lack of enough ready money brought forth a new dangerous trend: the amount of tax debts grew by 20% (almost BGN1.3 billion) and that of insurance fees increased by 26% (more than BGN150 million). Because of the blocked opportunities for repayment between companies, the risk of chain bankruptcies is becoming more and more real. In 2008, the number of bankruptcy procedures jumped twice from a year ago, and the gap between the business' indebtedness and GDP may make the economy keep on falling this and the next year.
Siberia Airlines to fly from Plovdiv
S7 Airlines (Siberia Airlines), Russia's largest airline on domestic routes, will launch flights from Bulgaria’s southern city of Plovdiv to Moscow, said Bulgarian transport minister Kamen Kichev. The carrier will operate weekly flights to Moscow’s Domodedovo Airport, with return fares ranging between EUR 290 to 920. At the moment, the airliner flies once a week to Bulgaria’s Varna, on the northern Black Sea coast. Meanwhile, the transport ministry plans to invite a competition to pick a carrier to operate regular flights between Plovdiv and Baku. The move will form part of the facility’s development strategy, which involves also a 40% reduction in airport fees from April 2010 in a bid to draw in more carriers, Kichev said. Minister Aleksandar Tsvetkov said the ministry is considering seeking a concessionaire for Terminal 1 at Sofia Airport, the nation’s busiest airport, which is being used by charter and no-frills operators. The ministry plans to invite investors from Europe and the Middle East as well as the European Bank for Reconstruction and Development (EBRD) and the World Bank.
Hamburg International launches Sofia-Berlin flights
The German airline Hamburg International is launching Sofia-Berlin flights starting December 23, 2009.During the winter season the flights will be every Thursday, the company has announced.Starting March 14, however, Hamburg International is going to have two Sofia-Berlin flights weekly – on Wednesdays and on Saturdays.Hamburg International is a chartered and regular flights operator founded in 1998.
Spectrum Net plans acquisitions
Local internet-based telecommunications company Spectrum Net plans acquisitions in the alternative telecoms sector. It placed a EUR 4.25mn five-year bond. Recently, Spectrum Net signed a contract with Hungary ’s Magyar Telekom, a subsidiary of Deutsche Telekom, to take over the alternative landline and internet company Orbitel. The deal is valued at some EUR 5mn and should be completed in the beginning of next year. The concentration is expected to result in above EUR 20mn revenues and EBITDA in the tune of EUR 5mn next year.
Over 180 construction companies will be given funds under agreement
More than 180 construction companies will be given funds under the agreement signed between the Ministry of Finance, Ministry of Regional Development and Public Works and Bulgarian Construction Chamber. The document settles the way the two ministries will pay the construction companies the public debts by March 2010, FOCUS News Agency reports. The payments are distributed as follows: 20% of the irrefutably proven funds – in January, 40% – in February and 40% – in March 2010. The agreement is worth BGN 200 million, but BGN 23 million has already been paid.
THE CRISIS:
World Bank: Bulgaria, Latvia young firms worst hit by crisis
The World Bank has announced on Friday that the world economic crisis has had its most devastating effect on businesses in Eastern Europe, which are among the youngest."The research allowed us to establish that young, new enterprises and those that work primarily with qualified staff, have registered a sharp drop in turnover," the institution said in a statement.The study analyzed the effects of the crisis on 1 686 companies from six countries (Bulgaria, Hungary, Latvia, Lithuania, Romania and Turkey), whose leaders were interviewed in June and July. The most negative was the impact of the crisis on business in Bulgaria and Latvia, the bank noted."Sales of young companies (under five years old) have decreased by an average of 46% on an annual basis to 36,9% in older ones (over 10 years)," the study authors reported.These enterprises were however "considered best equipped to withstand the crisis and achieve growth in the future. The extremely serious consequences of the crisis on them, pose questions about the pace of recovery of these six economies," said World Bank economist and specialist on this region, Paolo Korrea."Many enterprises, including companies focusing on their domestic market, operating in sectors with no exports, have actually achieved growth, suggesting that the global crisis may be about to lead to structural changes in these economies", relying mainly on exports, the World Bank survey concluded.
95% of Bulgarian companies saw drop in sales in 2009
A total of 95% of Bulgarian firms saw their sales decline in 2009 as a result of the global economic crisis, according to the fifth annual survey of the Bulgarian Industrial Association.The results of the survey “2009 in the Eyes of the Business” were presented Monday by the BIA Chair, Bozhidar Danev.80% of the respondents – which are all members of the BIA – have said that their firms had reduced their output. 52% of the Bulgarian businessmen expect a worsening of the crisis in 2010, 45% expect improvement, 3% abstained from making forecasts.38% of the firms have stated their intention not to cut the salaries of their employees, while 42% are undecided.Danev forecast that by the end of 2010 the unemployment in the country will be 16,4%. He got this figure by adding 5% of “unofficial” or unregistered unemployment to the government forecast for an unemployment rate of 11,4%.“Our data show that we have gone back to the 2005 level in our economic development. We have wiped out three successful years. The November figures show we are at the 2005 level, and our economy continues to decline. During the third quarter of 2009 we had a GDP decline of 5,9%. The rate of economic decline has still not slowed down. It is as if we had an economic winter in 2009,” Danev declared.The BIA Chair said the export-oriented sectors had borne the brunt of the economic crisis because it came to Bulgaria from abroad. These are the machine building and shipbuilding sectors, as well as construction and transport in addition to them.The food industry, agriculture, and production of pharmaceuticals are doing better but they are oriented mainly towards the domestic market.The BIA data shows that the state is one of the major generators of corporate debt. The Bulgarian stat owes BGN 2 B to private companies under public procurement procedures.Danev called 2010 a year of survival, and recommended that companies limit their investments and in some cases switch to other products.He called upon the business sector to retain its qualified workers because the wider EU market could suck them out.
Railroad cargo transportation falls 28.6% y/y in November
The cargo carried by railroad companies in the country dropped by 28.6% y/y to 1.07mn tons in November decelerating further from 30.7% y/y in October and 42.4% y/y in August, according to data of the statistical institute. The annual decline continues to be due mainly to domestic transportation. Total cargo contracted by 11.3% m/m after rising by 20.1% in October. The number of transported passengers fell by 7.1% y/y to 2.47mn in October and by 8.6% y/y in September. They were by 8.6% less as compared to one month earlier.
Crisis is in people's minds rather than in economy
Author: Prof. Zdravko Raykov, Standart daily
When I started working on my book entitled: How to be Financially Successful in Times of Crisis," I re-discovered the meaning of the old Chinese wisdom saying that a crisis is actually a new opportunity. In a poll, held in the USA, 78% of the respondents have answered that they rely on no one but themselves to overcome the difficulties. In Bulgaria, the situation is completely different: 80% of the Bulgarians say that they count on PM Boyko Borissov to solve the problems. In our country people seem to show little interest interest in their own fate; there is a kind of laziness, readiness to delegate the responsibility for our future to the state. If the Bulgarians decide to look upon this crisis as a chance for "recharge" of their powers, our compatriots should take their destiny in their own hands and try to improve their living standard. The state, on the other hand, should take to work and get things straight in such spheres of public life as justice, where chaos reigns. All the rest is up to us. However, it is necessary to understand that money is not an end in itself. It is just an instrument in our striving for better life.It is important to everyone to realize that after 2008 the world has become different and would never be the same. Half of the global wealth has melted down; it has just disappeared and could not be restored.The crisis has its ?silver lining?, though - it allows to extract the maximum from our resources. This applies to a great extent to the political elite, which also will not be the same after the crisis is tamed. High unemployment rates, hyperinflation, food supply and demographic crisis are looming large. They will challenge the leadership qualities of the Bulgarian elite. Few will stand up to the pressure of the thousands of unemployed and would loose their elite position. And with a new social demands new people appear...