Bulgarian Economy and Banking Sector - State and Trends

Abstract

According to flash estimates data of the National Statistical Institute, in Q2 2016, GDP growth in real terms was 3.0% yoy. Тhe employment rate in Q2 increased by 0.8pp yoy reaching 49.5%. As a result, the unemployment rate decreased by 1.9pp to 8.0%. In July 2016, the consumer price index indicates a monthly inflation of 1.0%, breaking the deflationary trend. The coverage of the monetary base with FX reserves remained high in June (179.6%), which guarantees stability of the currency board. The current account balance was again positive in the second quarter of the year. The Netherlands was the leading foreign investor in Bulgaria for H1 2016, followed by Luxemburg and Great Britain. Lending continued declining in June 2016 in year-on-year terms, while deposits continued rising. Nevertheless, a month-on-month growth lending was observed in June.