August 2021 / Bulgaria

In May 2021, industrial production in Bulgaria grew by 15.1 per cent compared to May 2020, reads the latest Monthly Report on Bulgarian Economy released by the Economy Ministry on Thursday. Growth continued to be driven by the manufacture  of  motor  vehicles, trailers  and   semi-trailers, of machinery and equipment, and of metal products. The report, elaborated by the Economic and Financial Policy Department, presents the latest developments of main macroeconomic indicators based on statistical data as at July 16. In May 2021 year-on-year, the industrial  turnover from the export of basic metals and energy goods increased, while electricity, gas, steam and air conditioning supply contributed the most to domestic turnover growth. The growth in construction production  slowed down significantly and a decline was registered in building construction. At the same time,  the growth of retail trade turnover was 24 per cent, with an increasing contribution of retail sale of food, beverages and tobacco. According to the National Employment Agency's data, the registered unemployed numbered 170,716 at the end of June, similarly to the same month of 2018 and 2019, which is a historic low for this parameter so far. The Finance Ministry's analysts expect the downward trend in the dynamics  of  the registered unemployed to continue in July, followed by a reversal of the trend in the fall months, mostly due to seasonal factors. In June, the monthly Harmonised Indices of Consumer Prices (HICP) inflation rate was 0 per cent, while the annual HICP inflation rate accelerated marginally to 2.4 per cent largely yjnks to the increase in prices of energy and transport fuels in particular, as the latter reached 24 per cent year-on-year. Core inflation decelerated by 0.1 percentage points to 1.4 per cent. The  rising  international  prices continued to push up nominal growth in trade with goods in April. Export and import increased by 49.6 per cent and 56 per cent, respectively, from April 2020. Trade with the EU had the highest contribution to the nominal growth. Gross external debt reached 59.1 per cent of projected GDP at end-April. It increased by 0.5 percentage points from a month  earlier, driven mostly by higher short-term bank credit. Private sector credit growth accelerated further in May, up by 6.4 per cent year-on-year, compared to an annual increase by 6.1 per cent at the end of April. At еnd-May, a deficit of 0.1 per cent of projected GDP was reported on the Consolidated Fiscal Program (CFP). In January-May 2021, CFP receipts increased by 16.1per cent year-on-year. At end-May, government debt amounted to 24.5 per cent of projected  GDP, compared to 21 per cent of GDP a year earlier.

Source: Novinite

A proposal was submitted to the Bulgarian parliament by its members for the application of a reduced 9% VAT rate for certain medicinal products. Currently, they are subject to the standard 20% VAT rate. These products, including medical devices and dietary foods for medical purposes, are listed in Article 262 of the Law for the Medicinal Products in Human Medicine and are paid with funds from the budget of the National Health Insurance Fund.

The full text of the proposal, issued on 30 July 2021, is available here (in Bulgarian only).

As a next step, the parliament will vote on the proposal.

In January-May 2021, Bulgarian export to the EU increased by 23/4 per cent from this time last year, reaching a total of 17,616.9 million leva, according to snap statistics by the National Statistical Institute released Thursday. In May alone, the export to the EU increased by over a third, 31.4 per cent, from this time last year, to a total of 3,363.2 million leva. EU export to Bulgaria in January-May 2021 went up by 25 per cent from the same period of 2020, reaching 17,879.5 million leva. Value-wise, the biggest import was from Germany, Romania, Italy, Greece, the Netherlands and Hungary. In May alone, the export grew by 50.4 per cent from this time last year, reaching 3,682.7 million leva. Bulgaria ran a deficit of 262.6 million leva (FOD export - CIF import) in its foreign trade in January-May. Trade with third countries The Bulgarian export to third countries (non-EU members) increased by 14.4 per cent from a eyear earlier, to a total of 10,580.7 million leva. In June alone, the export to this countries grew by 26.8 per cent to 1,838.6 million leva. Imports from third countries in January-June 2021 rose by 24.2 per cent from this time last year to 13,970.7 million leva. The biggest imports were from Turkey, the Russian Federation, China and Ukraine. In June alone, imports grew by 44 per cent to 2,690 million leva. Trade with third countries showed a deficit of 3,390 million leva for Bulgaria in January-June, including a deficit of 851.4 million leva in June alone.

A proposal was submitted to the Bulgarian parliament by its members for the application of a reduced 9% VAT rate to supplies of fruit and vegetables. The main objective of the introduction is to reduce tax fraud in the sector.

The temporary measure would be applicable between 1 January 2022 and 31 December 2023.

The full text of the proposal, issued on 26 August 2021, is available here (in Bulgarian only).

As a next step, the parliament will vote on the proposal.