site.btaLending to Bulgaria's Private Sector Up 13.7% in April

Lending to the private sector in April accelerated, up by 13.7% vs.12.9% yеar-on-year a month earlier, the European Affairs and Economic Analysis Directorate of the Finance Ministry said in its Monthly Report on Bulgarian Economy on Tuesday. All credit segments continued to increase steadily with corporate loans up by 8.6% vs. 8.2% y/y in March.

During the month corporate overdraft slightly accelerated in line with the business climate indicator improvement, while the drop of bad and restructured loans was less compared to the drop in April 2023. Corporate overdraft slightly accelerated in line with the business climate indicator improvement, while the drop of bad and restructured loans was less compared to the drop in April 2023. Loans to households kept accelerating to 18.6% y/y, coming from 17.5% y/y. The main drivers behind their dynamics were again both consumer and mortgage loans, which continued to accelerate, up by 14% and 23.9% y/y, respectively, the report said.

The report continued with additional economic data highlights. GDP growth was 1.9% y/y in the first quarter. All sectors, barring inventory changes, contributed positively to this growth. Household consumption growth accelerated to 3.7% supported by a robust increase in real disposable income. Gross fixed capital formation rose by 8.4%, driven primarily by investments in machinery and equipment. Exports of goods and services declined by 2.5%, which was outpaced by a 3.9% fall in imports.

The Harmonized Index of Consumer Prices (HICP) shows monthly inflation in May at 0%, indicating general consumer prices levels have remained stable compared to previous month's levels.

The annual rate HICP inflation rate accelerated by 0.2 pps to 2.7% in May. Analysts attribute this mainly to higher y/y rise in energy prices, from 1.7% in April to 2.6% in May 2024, largely due to the underlying effect in transport fuel prices.

Transport fuel prices decreased in May by 2% mom, a less significant drop compared to May 2023's stronger 3.8% decline, which subsequently accelerated their annual inflation rate. Underlying inflation also increased to 3% y/y in May up from 2.5% in April. This was mainly due to the dynamics in services, particularly those in the transportation sector.