site.btaFinance Ministry: Q3 Economic Activity Indicator Remains Unchanged

In the third quarter, economic activity remained unchanged, according to the Economic Activity Indicator (EAI). Real GDP growth is expected to remain at the level of the previous quarter, according to the third issue of the quarterly review Indicator of Economic Activity in Bulgaria published on the website of the Finance Ministry. The analysis is prepared by the European Affairs and Economic Analysis Directorate.

The analysis notes that, similar to trends in the euro area, consumer confidence improved, while the business climate and indicators of economic activity in industry deteriorated.

The EAI maintained its value of -0.32 in the third quarter, according to the report. Both the cyclical and the long-term components remained at the previous quarter's levels.

Most of the indicators included in the EAI recorded a slight deterioration compared to the second quarter, while others improved. The most negative contributors compared with the previous quarter were the indicators for employment, credit (non-financial corporations and households), construction output and the quarterly Euribor index. Improvements were recorded in the EU industrial production, international non-energy commodity prices and EU GDP indicators.

In the third quarter of the year, the cyclical position of the euro area's €-coin composite indicator (a monthly indicator for assessing economic activity in the euro area) remained almost unchanged, the analysis also said. Economic activity in industry had a negative impact on the value of the €-coin, while employment growth in the euro area and increased consumer confidence had a favourable impact on the value of the indicator. The increase in employment is driven by the services sector, while consumer confidence rises mainly in respondents' expectations about their future financial situation.

The EAI aims to present in a summary the current state of the Bulgarian economy, as well as to assess the dynamics of its long-term and cyclical components. It is constructed using a dynamic factor model and is composed of fifteen macroeconomic variables measuring changes in the internal and external economic environment. The publication presents the EIA 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 explains.