Recent Developments and Short-term Outlook on the Bulgarian Economy

Abstract

Тhe real GDP growth in the second quarter of 2015 surpassed again expectations, reaching 2.4% yoy. After three months of deflation, in August, a flat inflation rate was observed. A slight positive inflation is expected in the upcoming months. The state budget accumulated a significant surplus as a result of a solid increase in revenues and a moderate rise in expenditures. In July, the current account was positive. The export accelerated by 7.3% yoy, while the import went up at a faster pace by 13.3%.
The coverage of the monetary base with FX reserves was high as of July. Thus, currency board and banking system remain stable. Lending contracted for the ninth consecutive month. However, the share of non-performing and restructured loans narrowed. Deposits continued growing against the background of gradually lowering interest rates.