Bulgaria's June Current Account Balance Ends on Positive

2010-08-16

In June Bulgaria's current account had a surplus of EUR 117 M, according to Central bank data. Bulgaria’s trade deficit has shrunk in June while the current account balance is positive, according to data of the country’s Central Bank, BNB. In June, the current account had a surplus of EUR 117 M, compared to the negative, EUR 3.8 M balance, in May. On annual basis data shows that in June 2009, the deficit amounted to EUR 280 M. For the first half of 2010, the accumulated deficit is EUR 623.6 M or 1.8% of the Gross Domestic Product (GDP). For the same period of last year the deficit was 4% of GDP. The current account surplus is explained with the larger positive balance in the “Services” item over increased transportation and tourist services in the beginning of the summer season. The current account also had a surplus in February over transfers of money from the EU funds and the reduction of the trade deficit. The trade balance has a strong influence on the current account – in the first half of 2010 it was EUR 1.4 B or 4% of GDP, down nearly 42% compared to the January – June period of 2010. This is due to the increased export – by 26% for the first half of the year on annual basis. Bulgaria’s Finance Minister, Simeon Djankov, recently stated that the 9-month-long trend of growing export is a certain sign the crisis is ending, but many experts remain cautiously optimistic, warning increased export cannot compensate for the slump in internal demand. The crash in direct foreign investments is another strong negative – in the first six months of the year, Bulgaria has attracted only EUR 358.5 M – 78% down on annual basis, according to preliminary data, covering just 58% of the deficit.