Download Comparison with the previous projection

Dimitar Bogov
Governor
May, 2013
•
Macroeconomic projections for 2013 -2014
• External assumptions
• Main macroeconomic scenario for 2013 -2014
•
Comparison with the previous projection


In the period between the two projections, improvement
in the global economic perceptions has generally been
registered, given stabilization on the financial markets
However, the expectations for activity reduction in the
Euro area in 2013 and moderate recovery in 2014 stayed
on, in conditions of the new “debt tremors”, destructed
monetary transmission, uncertain ambient and low
confidence level

Expectations for slightly deeper decrease in the foreign effective
demand in 2013 compared to the previous projection and its
moderate recovery in 2014, which is in line with the January
projection
Foreign effective demand
Decomposition of foreign effective demand growth
(weighted contributions to annual foreign effective demand growth rates )
(annual growth rates, %)
2.0
1.5
1.0
0.5
0.0
0.5
0
1.0
-0.5
0.4
2.5
Croatia
2.0
Bulgaria
1.5
Serbia
1.0
-0.5
0.5
-1.0
0.0
-0.6
-1.5
Netherlands
Italy
Spain
-0.5
-2.0
Greece
-1.0
-2.5
-1.7
2010
2011
2012
January 2013
Germany
-1.5
-3.0
2013
April 2013
2014
Belgium
-2.0
2010
2011
2012
2013
2014



In the first quarter of 2013, the foreign effective inflation beyond the
expectations
Minimal upward revision for 2013 and moderate upward correction
for 2014
Expectations for more significant acceleration of the annual foreign
effective inflation dynamics in 2013 and its moderate deceleration in
2014
Foreign effective inflation
Decomposition of foreign effective inflation
(annual rates, %)
6.0
(weighted contributions to annual foreign effective inflation rates)
6.0
Bulgaria
5.0
5.0
4.2
4.0
3.5
2.7
3.0
2.0
1.3
1.4
3.4
2.0
1.0
0.0
2010
2011
Austria
4.0
2012
January 2013
2013
April 2013
2014
U.S.
3.0
Slovenia
2.0
Serbia
1.0
Italy
0.0
Croatia
-1.0
Greece
-2.0
Germany
France
-3.0
2010
2011
2012
2013
2014




Generally, downward revision of the world stock exchange prices for
2013 and 2014, relative to the January projection
Decrease in the crude oil prices in 2013 and 2014, compared to the
increase in 2012
Lower metal prices, downward adjustment in 2013 and slight rise in
2014
No pressures of the world food price as previously anticipated
2011
Exchange
rate
USD/EUR
(increase =
appreciation
of EUR)
4.9
2012
2013
2014
-7.6
1.9
-1.7
0.9
-2.4
-5.6
9.3
-4.3
-4.0
-6.1
-3.0
1.5
-23.4
-3.9
0.3
-9.8
-3.9
0.0
7.5
-3.3
3.3
11.0
-12.0
-14.5
2012
2013
2014
-7.5
-1.2
-1.1
0.9
-5.7
-4.4
9.1
-4.6
-3.4
-6.1
0.3
1.7
-23.4
-0.6
1.3
-9.8
-1.4
0.4
7.4
9.6
2.3
11.2
-3.3
-7.3
annual changes, %
Forecast April 2013
Forecast January 2013
Export metal
Nickel price Copper price Wheat price
price index
Crude oil
Crude oil
Corn price
(USD per
barrel)
(EUR per
barrel)
(EUR based,
2005=100)
39.3
32.7
15.3
5.0
17.0
34.9
49.6
(USD per
(USD per
(EUR per
(EUR per
metric tonne) metric tonne) metric tonne) metric tonne)




Almost unchanged foreign demand, as well as almost unchanged perceptions for
the labor market, foreign direct investments and credit activity relative to the
previous projection
The estimations for the economic growth in 2013 and 2014 unchanged compared
to the previous projection
Moderate recovery of the economy in 2013 and growth acceleration in 2014, given
expectations for positive effects of the structural changes on the exports and
moderate increase in the domestic demand
Closure of the negative output gap in the second half of 2014
GDP
5.0
4.0
3.0
2.0
Output gap
(annual growth rates, in %)
2.8
2.8
3.0
3.0
2.2
3.0
1.0
3.0
0
-1
-2
0.0
-1.0
1
2.2
-0.3
0.0
(in %)
2
-3
-2.0
-3.0
2010
2011
2012
January 2013
2013
April 2013
2014
-4
2010
2011
2012
January 2013
2013
2014
April 2013



After the decrease in 2012, moderate recovery of the exports in 2013 and its
further intensification in 2014 is expected, in environment of expectations for
recovery of the foreign demand in 2014 and positive effect of the activity of the
new facilities
Moderate increase in the import pressures in 2013 and 2014, stimulated by both
the export and domestic demand
Increase in the domestic demand in 2013, expecting its intensification in 2014,
mostly due to the announced foreign direct and public investments and favorable
movements on the labor market
Annual growth rates (in %, seasonally adjusted data)
General
government
final
consumption
0.6
-2.0
0.6
Gross
capital
formation
0.4
-4.6
13.5
Export
-16.0
23.2
11.8
Import
-14.1
8.9
13.8
Domestic
demand
-2.9
-0.3
5.4
Net Export
-10.8
-14.6
18.4
period
2009
2010
2011
GDP
-1.0
2.8
3.0
Household
final
consumption
-4.6
1.4
4.0
2012
-0.3
-1.2
1.3
11.8
-0.4
3.5
1.9
12.4
2013
2.2
1.5
1.3
6.4
4.0
3.9
2.6
3.8
2014
3.0
3.6
0.6
8.3
9.5
9.4
4.3
9.2
General
government
final
consumption
0.1
-0.4
0.1
Gross
capital
formation
0.1
-1.1
3.1
Export
-6.9
8.4
5.1
Import
9.5
-5.2
-8.5
Domestic
demand
-3.6
-0.4
6.4
Net Export
2.6
3.2
-3.4
Contributions to annual growth (in p.p.)
period
2009
2010
2011
GDP
-1.0
2.8
3.0
Household
final
consumption
-3.8
1.1
3.1
2012
-0.3
-0.9
0.2
3.0
-0.2
-2.4
2.3
-2.6
2013
2.2
1.1
0.2
1.8
1.9
-2.8
3.2
-0.9
2014
3.0
2.8
0.1
2.5
4.6
-6.8
5.4
-2.2



Slight deepening of the current account deficit in 2013 and more evident
deepening in 2014
Decrease in the trade deficit in 2013, and its widening in 2014, given more
evident import pressures by the investment demand
Private transfers stabilization and fall in their share in GDP
% of GDP
2009
2010
2011
2012
2013
2014
-6.8
-2.0
-3.0
-3.9
-4.2
-6.0
Trade balance
-23.3
-20.5
-22.4
-23.7
-23.3
-24.6
Current transfers, net
16.9
19.4
19.7
21.5
20.6
20.3
Current account balance
of which:



Expectations for gradual increase in the foreign direct investments in 2013
and 2014
Similar level of net capital flows in 2013 and their increase in 2014,
retaining the dominant share of the foreign direct investments and
external borrowing of the Government in their structure
In 2013 and 2014, increase in the foreign reserves is expected, and their
maintenance near the adequate level
Net-capital flows
Foreign direct investment
400
4.5
4.5
5.0
7.0
300
4.0
3.0
3.0
200
2.2
2.0
1.5
100
1.0
0
0.0
2010
(in % оf GDP)
8.0
2011
millions of EUR
2012
2013
2014
as % of GDP (right s cale)
6.0
7.3
6.8
6.2
6.9
4.7
5.0
4.8
4.0
3.0
4.4
2.0
2.0
1.0
0.0
2009
2010
2011
January 2013
2012
2013
April 2013
2014




Downward revision of the projected inflation for 2013 (from 3.2% to 2.8%)
and assessment for its stabilization in 2014 (2.3%)
Absence of demand pressures given negative production gap until the second
half of 2014
The world oil and food prices move downwards during the current and the
following year
Anticipated increase in the regulated prices in the domestic economy in 2013
Output gap and inflation
(in %)
6
5
4
3
2
1
0
-1
-2
-3
-4
2010
2011
2012
Output gap
2013
Inflation
2014

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
Expectations for moderate credit growth acceleration similar to the January
projection, given further increase in the deposits and available foreign
sources of funding
However, the uncertain global ambient, the banks risk perceptions and the
business strategies of the European banking groups also present on the
domestic market, can reflect on the credit policy of the domestic banking
sector through higher prudence
The banking system continue registering high capital adequacy ratio (17.1%
at the end of 2012), high liquidity and moderate increase in the
nonperforming placements of the nonfinancial entities (11.9% at the end of
February 2013 )
Total loans
(annual growth rates, %)
12.0
11.0
10.0
9.0
8.0
7.0
6.0
5.0
4.0
3.0
2010
2011
2012
January 2012
2013
April 2013
2014
Estimations for the economic growth unchanged relative to the previous
projection – GDP growth of 2.2% for 2013 and growth acceleration to 3%
for 2014
- almost unchanged perceptions for foreign demand, foreign investments, labor market and
credit support
- both the export and the investment activity – remain to be the main factors for the
economic growth
- these two factors in 2014 accompanied with the strengthened positive contribution of the
private consumption
Downward revision of the projected inflation from 3.2% to 2.8% for
2013 and maintenance of the January projection of 2.3% for 2014
- lower initial conditions
- poorer inflationary pressures from the import food and energy prices
- further absence of domestic demand pressures
External position
- higher current account deficit in 2013 (given higher realization for 2012), when smaller
anticipated surplus with the services and higher deficit with the income, as well as slight
downward revision with the capital flows were expected (mainly because of the short-term
capital flows)
- deeper current account deficit for 2014, but also higher capital inflows
- increase in the foreign reserves





Moderate increase in the economic activity during this and the following
year, triggered by the higher investment activity and the anticipated
recovery of the exports, additionally supported in 2014 by the higher
positive effect of the private consumption
Downward revision of the projected inflation for 2013 and maintenance of
the January expectations for deceleration of the inflationary pressures in
2014
Moderate widening of the current account deficit in 2014, partly driven by
the increase in the import of investments
The capital inflows in 2013 and 2014, sufficient for covering the current
account deficit and additional accumulation of the foreign reserves
Sensitivity to the scenario of possible changes in the global economic
environment