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Βulgaria
* Macroeconomic & Business Environment* Bilateral Economic & Commercial Relations * Prospects
Theologia VoulgariSecond Secretary for Economic & Commercial Affairs Embassy of Greece in Sofia
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General Information
Territory – 110.994 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 1.95583) Pan-European Transport Corridors (4, 7, 8, 9, 10)
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Macroeconomic Environment-Macroeconomic Environment-Latest dataLatest 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 Final consumption stepped up by 1% due to growth in
household expenditures - at the same time government household expenditures - at the same time government consumption decreased by 4.4%.consumption decreased by 4.4%.
The import of goods was up 3.4% supported by The import of goods was up 3.4% supported by domestic demanddomestic demand
ExportsExports declined as a result of weaker demand from declined as a result of weaker demand from Bulgaria’s main trading partners. Bulgaria’s main trading partners.
Current Account Balance:Current Account Balance: -0.7 (2011 +1.7) -0.7 (2011 +1.7)
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Macroeconomic Environment – Macroeconomic Environment – Latest dataLatest data
Harmonized Index of Consumer Prices: 3.4% (2011-Harmonized Index of Consumer Prices: 3.4% (2011-2.2.4%4%))
Gross value added increased slightly. Positive contributions from agriculture, manufacturing,
trade, transportation and accommodation, public administration, entertainment. NegativeNegative from the rest. from the rest.
The construction sector posted a 12.6% declineThe construction sector posted a 12.6% decline
After three years of strong contraction, After three years of strong contraction, investment investment activityactivity stabilised over 2012 supported mainly by stabilised over 2012 supported mainly by public projects and some recovery in FDI. public projects and some recovery in FDI.
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Macroeconomic Environment - Macroeconomic Environment - Latest data Latest data
Registered unemployment Registered unemployment increased further to increased further to 11.9%11.9% (2011 -11%11%))
The The average wage in the economy average wage in the economy continued to continued to increase; according to preliminary data by 11.7% and increase; according to preliminary data by 11.7% and 9.1% in nominal and real terms respectively. 9.1% in nominal and real terms respectively.
Labour productivity Labour productivity also kept expanding, up 5.4% also kept expanding, up 5.4% in 2012. in 2012.
This resulted in This resulted in real unit labour cost real unit labour cost decrease of 2% decrease of 2% yoy. Favorable labour productivity developments were yoy. Favorable labour productivity developments were determined primarily by the trade and real estate determined primarily by the trade and real estate sectors.sectors.
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Macroeconomic Environment – Macroeconomic Environment – Latest data Latest data
Strong Fiscal positionStrong Fiscal position: Improved fiscal deficit from to : Improved fiscal deficit from to 2% of GDP in 2011 to 1% of GDP in 20122% of GDP in 2011 to 1% of GDP in 2012
Expectations for GDP in 2013 Expectations for GDP in 2013
- IMF:- IMF: 1.5% 1.5%
- European Commission: 1.4% and 2% for 2014- European Commission: 1.4% and 2% for 2014
- EBRD: 1.9% for 2013 - EBRD: 1.9% for 2013
- World Bank: 1.8% (initially 2.5%)- World Bank: 1.8% (initially 2.5%)
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Business Environment: Business Environment: Generally positiveGenerally 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
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Business EnvironmentBusiness Environment
The business climate indicator rose by 5,7% compared to January 2012.
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.
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Business EnvironmentBusiness Environment –Main types of companies
1. Limited Liability Company (OOD)- Minimum Capital: 2 leva(~ € 1)
2. Joint Stock Company(AD) - Minimum Capital: 50.000 leva (~ € 25.000)
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Business EnvironmentBusiness 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 % - 0.45%
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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
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Government support - Sectors
Manufacturing Research & development Education Healthcare High-tech services Warehousing and logistics
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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.
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Greek investment in BulgariaGreek 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.
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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 2.500 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
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Bilateral Trade Relations
Million euros 2008 2009 2010
2011
Volume of Trade 2.424
1.817,3
2029,1
2.395,6
Greek Exports 1.251 968,21.059,
61.239,2
Greek Imports 1.173 849,1 969,5 1.156,4
Current Account Balance
+77,9
+119,0
+90,1 +82,8
Source: ΕΣΥΕ
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PROSPECTSPROSPECTS
TourismTourism Food & drink productsFood & drink products Infrastructure Projects and Real Estate Infrastructure Projects and Real Estate
DevelopmentDevelopment Environmental TechnologiesEnvironmental Technologies Information and Communication TechnologiesInformation and Communication Technologies Automotive Automotive Healthcare/MedicalHealthcare/Medical
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Thank you for your attention! Thank you for your attention!
Theologia VoulgariTheologia Voulgari
Office for Economic & Commercial AffairsOffice for Economic & Commercial Affairs
Embassy of Greece in SofiaEmbassy of Greece in Sofia
[email protected]@grembassysofia.org