site.btaAnalysts See Likelihiood of Fast but Unsustainable Economic Growth in Bulgaria

Analysts See Likelihiood of Fast but Unsustainable Economic Growth  in Bulgaria

Sofia, July 26 (BTA) - There is a trend for fast but unsustainable economic growth in Bulgaria, according to the analysts of Elana Trading. Their analysis on the national economy in the second half of 2016 says that the global situation puts hurdles for the Bulgarian economy.

The GDP is expected to increase by 2-3 per cent this year.

Consumption has played a significant role in generating a GDP growth in the past year.

Employment and incomes are improving gradually but very slowly, and domestic demand has spent its potential for stepping up growth any further. Faster growth is possible only by increasing lending to sectors such as construction, or directly for consumption, the analysis says.

The economy and the capital market in Bulgaria have not yet felt the effect of the zero income from bank deposits. But a change is slowly beginning and people are starting to consider higher-income alternatives.

On the Bulgarian Stock Exchange, the first half of 2016 brought no growth. The indices have remained largely unchanged and only the real estate funds in the BGREIT index grew by some 5 per cent, the analysts say.

They blame this situation on the lack of any positive changes in the market environment: the financial reports show no significant improvements, investors are looking at the income from dividends, the money remains in bank savings and there are no exciting mergers, acquisitions or other corporate transactions. A change can only happen if money starts leaving the bank accounts and go into higher-income alternatives, including stock. Analysts expect that this process is yet to pick up.

They expect, however, that the economic slowdown in Europe will delay corporate transactions for next year or later.