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1 Βulgaria * Macroeconomic & Business Environment * Bilateral Economic & Commercial Relations * Prospects Theologia Voulgari Second Secretary for Economic.

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Presentation on theme: "1 Βulgaria * Macroeconomic & Business Environment * Bilateral Economic & Commercial Relations * Prospects Theologia Voulgari Second Secretary for Economic."— Presentation transcript:

1 1 Βulgaria * Macroeconomic & Business Environment * Bilateral Economic & Commercial Relations * Prospects Theologia Voulgari Second Secretary for Economic & Commercial Affairs Embassy of Greece in Sofia

2 2 General Information Territory – sq. Km Population – 7.3 million Capital: Sofia – 1.4 mln Biggest cities: Plovdiv, Varna, Bourgas, Rousse Main airports: Sofia, Plovdiv, Varna, Bourgas Ports: Varna, Bourgas Danube ports: Vidin, Lom, Rousse Currency: Bulgarian Lev (BGN) pegged to Euro (EUR 1 = BGN ) Pan-European Transport Corridors (4, 7, 8, 9, 10)

3 3 Macroeconomic Environment- Latest data “Sluggish growth” in 2012: GDP expanded by 0.8% The main growth driver: Domestic demand Final consumption stepped up by 1% due to growth in household expenditures - at the same time government consumption decreased by 4.4%. Final consumption stepped up by 1% due to growth in household expenditures - at the same time government consumption decreased by 4.4%. The import of goods was up 3.4% supported by domestic demand The import of goods was up 3.4% supported by domestic demand Exports declined as a result of weaker demand from Bulgaria’s main trading partners. Exports declined as a result of weaker demand from Bulgaria’s main trading partners. Current Account Balance: -0.7 ( ) Current Account Balance: -0.7 ( )

4 4 Macroeconomic Environment – Latest data Harmonized Index of Consumer Prices: 3.4% ( %) Harmonized Index of Consumer Prices: 3.4% ( %) Gross value added increased slightly. Negative from the rest. Positive contributions from agriculture, manufacturing, trade, transportation and accommodation, public administration, entertainment. Negative from the rest. The construction sector posted a 12.6% decline The construction sector posted a 12.6% decline After three years of strong contraction, investment activity stabilised over 2012 supported mainly by public projects and some recovery in FDI. After three years of strong contraction, investment activity stabilised over 2012 supported mainly by public projects and some recovery in FDI.

5 5 Macroeconomic Environment - Latest data Registered unemployment increased further to 11.9% 11%) Registered unemployment increased further to 11.9% ( %) The average wage in the economy continued to increase; according to preliminary data by 11.7% and 9.1% in nominal and real terms respectively. The average wage in the economy continued to increase; according to preliminary data by 11.7% and 9.1% in nominal and real terms respectively. Labour productivity also kept expanding, up 5.4% in Labour productivity also kept expanding, up 5.4% in This resulted in real unit labour cost decrease of 2% yoy. Favorable labour productivity developments were determined primarily by the trade and real estate sectors. This resulted in real unit labour cost decrease of 2% yoy. Favorable labour productivity developments were determined primarily by the trade and real estate sectors.

6 6 Macroeconomic Environment – Latest data Strong Fiscal position: Improved fiscal deficit from to 2% of GDP in 2011 to 1% of GDP in 2012 Expectations for GDP in 2013 Expectations for GDP in IMF: 1.5% - IMF: 1.5% - European Commission: 1.4% and 2% for European Commission: 1.4% and 2% for EBRD: 1.9% for EBRD: 1.9% for World Bank: 1.8% (initially 2.5%) - World Bank: 1.8% (initially 2.5%)

7 7 Business Environment: Generally positive Macroeconomic & financial stability (low budget deficit and government debt) Low cost of doing business: favorable taxes & lowest cost of labor within the EU Educated and skilled workforce Stable currency (Lev has been pegged to the Euro since 2002) Government support for priority investment projects Member of E.U., NATO, WTO

8 8 Business Environment The business climate indicator rose by 5,7% compared to January Respondents had positive expectations about demand and orders in the coming months. For the first time since mid-2012 there was an improvement across all sectors of the economy. The assessment of the current and future business situation was more favourable and optimistic.

9 9 Business Environment Business Environment – Main types of companies 1. Limited Liability Company (OOD) - - Minimum Capital: 2 leva(~ € 1) 2. Joint Stock Company(AD) - -Minimum Capital: leva (~ € )

10 10 Business Environment Business Environment – Taxation Corporate income tax applies at a uniform rate of 10%. Individual income tax is 10 % flat tax rate. Withholding tax at 5% is deducted from dividends distributed by Bulgarian resident companies. VAT rate is 20%. Real estate tax ranges among 0.01 % %

11 11 Government support under the Investment Promotion Act (IPA) Minimum investment amounts must exceed €10m - € 3.5m in regions with high unemployment and - € 2m for investment projects in high-tech services Benefits for certified investors include: – Shortened administrative procedures – Preferential acquisition of state or municipal land – Financial support for professional training / education – Infrastructure subsidies – Individual administrative services

12 12 Government support - Sectors Manufacturing Research & development Education Healthcare High-tech services Warehousing and logistics

13 13 Challenges Bureaucracy Corruption Slow moving court system A complicated and often non transparent tendering process. The fact that the country remains one of the EU’s poorest countries with limited consumer disposable income with a rapidly aging population of 7,3 million The current political situation.

14 14 Greek investment in Bulgaria Greece holds the third place within foreign investors in Bulgaria after Austria and the Netherlands with overall investment of €3,664 million.

15 15 Greek investment in Bulgaria

16 16 Bilateral Trade Relations   For Bulgaria, Greece is the 5th most important trade partner, while, at the same time, Bulgaria is the 6th bigger importer of Greek goods worldwide (2011)   Greece exports a wide range of products (around industrial και 400 agricultural) in Bulgaria   Despite the international economic downturn, the Greek- Bulgarian trade volume continually increases.   The trade balance is positive for Greece   According to the latest preliminary data for 2012 (11 months) Greek exports increased by 17,5% and reached € 1,41 billion

17 17 Bilateral Trade Relations Million euros Volume of Trade ,32029,12.395,6 Greek Exports ,21.059,61.239,2 Greek Imports ,1969,51.156,4 Current Account Balance +77,9+119,0+90,1+82,8 Source: ΕΣΥΕ

18 18 PROSPECTS Tourism Tourism Food & drink products Food & drink products Infrastructure Projects and Real Estate Development Infrastructure Projects and Real Estate Development Environmental Technologies Environmental Technologies Information and Communication Technologies Information and Communication Technologies Automotive Automotive Healthcare/Medical Healthcare/Medical

19 19 Thank you for your attention! Thank you for your attention! Theologia Voulgari Office for Economic & Commercial Affairs Embassy of Greece in Sofia


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