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General situation and outlook
During the boom years the mainly foreign-owned main banks fuelled the upswing with loans to the private sector, also denominated in Euro. However, due to the recession and the collapse of the real estate market many companies and private households have encountered problems in meeting their contractual obligations on due dates. This has strongly aggravated the commercial credit risk, triggering a high number of defaults. More non-performing loans (NPL) are to be expected this year, burdening the portfolio of the financial institutions.
The reduction of the private (especially banking) sector debt burden will hamper a comprehensive economic recovery this year. GDP is expected to grow just 0.1% in 2010, as domestic demand still decreases.
A potential threat is posed by the fiscal slippages since last year, as budget deficits were higher than planned in 2009 (3.9% of GDP) and this will probably continue in 2010 (3.5% of GDP). Further budgetary consolidation is urgent, and the EU Commission has placed Bulgaria under its excessive deficit watch in early July: the country has been given time until end-2011 to bring its budget deficit below a 3% of GDP threshold.
Real GDP growth (%)
Source: EIU / IMF
Fiscal balance (% of GDP)
Source: EIU / IMF
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General Information
Capital: Sofia
Government type: Republic / Parliamentary Democracy
Currency: Lev (BGL)
Population: 7.56 million
Status: Upper middle income country
(GDP/capita: US-$6,328 in 2010)
Main import sources (2009)
- Russia: 13.1%
- Germany: 12.2%
- Italy: 7.8%
- Greece: 6.1%
Main export markets (2009)
- Germany: 11.2%
- Greece: 9.4%
- Italy: 9.3%
- Romania: 8.6%
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Date: August 2010
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