site.btaEconomic Activity in Bulgaria Improves in Q1 of 2024, Analysis Reports

Economic activity in Bulgaria improved in the first quarter of 2024, but was affected by new geopolitical conflicts and the high level of uncertainty, according to the preliminary assessment of the Economic Activity Indicator (EAI), the Finance Ministry said on its website on Friday. The analysis was prepared by the European Affairs and Economic Analysis Directorate.

Real GDP growth for Bulgaria is expected to remain close to that reported in the previous quarter.

The EAI aims to present in a summarized form the current state of the Bulgarian economy, as well as to assess the dynamics of its long-term and cyclical components. It is constructed through a dynamic factor model and is composed of fifteen macroeconomic variables measuring changes in the internal and external economic environment indicators. The publication presents the Economic Activity Indicator in Bulgaria by quarters, assesses the degree of synchronization of the Bulgarian business cycle with that of the euro area and identifies the factors influencing the dynamics of the indicator, the Ministry explained.

The analysis stated that the EAI improved slightly in the first quarter of 2024, but remained negative at -0.42 compared to -0.46 in the fourth quarter of last year. The improvement was driven by both the cyclical and long-term components.

Most of the indicators included in the EAI showed an improvement compared with the fourth quarter of 2023, with the exception of employment, credit (non-financial corporations and households), the three-month Euribor index (Euribor), an interbank rate based on the interest rates at which euro area banks borrow funds from each other, and construction output. 

The current assessment reflects the improved position of both the external and domestic environment, the release notes. The biggest contributors were the industrial production indicators in both the European Union and Bulgaria. Significant improvements were also recorded in other domestic indicators such as retail turnover, industrial orders, industrial price expectations and the business climate.

In the first quarter of the year, the estimated cyclical position of the euro area composite indicator was also in negative territory, the analysis notes. In January 2024, the monthly indicator assessing euro area economic activity, the €-coin, declined significantly, mainly due to weaker demand and deteriorating consumer confidence. In February, it remained in negative territory for the twelfth consecutive month, yet positive employment signals managed to offset the steady weakening of confidence indicators. In March, the euro area composite indicator turned positive for the first time since early 2023, the analysis says, explaining that the rise in the indicator mainly reflected positive growth in stock prices and a recovery in qualitative indicators of economic activity.