This report covers the key macroeconomic and financial releases as well as the political events from Bulgaria for the period of June 6, 2014 - July 4, 2014.
Domestic political uncertainty poses a key risk to Bulgaria's growth outlook for 2014 because it may defer reforms and investments, the IMF said in a statement following its June 6-11 regular staff visit to the country.
Standard & Poor's cut on June 13 Bulgaria's long- and short-term foreign and local currency sovereign credit ratings by one notch to BBB-/A-3, saying the volatile domestic political environment since early 2013 continues to impede the implementation of structural reforms needed to improve the country's weak growth prospects.
Meanwhile, the World Bank kept unchanged its 2014 economic growth forecast for Bulgaria at 1.7% in to the June edition of its Global Economic Prospects report.
The plan of Bulgaria's National Statistics Institute (NSI) to begin calculating the contribution of illegal drug sales, prostitution and contraband to the economy will boost the country's 2014 gross domestic product by about 0.2pps.
Consumer price deflation deepened to 2% y/y in May 2014 from 1.6% the month before mainly due to a faster decline in food prices.
The registered unemployment rate rose by 0.2pps y/y to 11.2% in May 2014. Manpower survey showed that demand for workers will decrease in the third quarter of 2014 when compared with Q3 of the previous year.
The overall business sentiment indicator decreased by 1.0 point m/m to 23.5 in June 2014 on worsened outlook in industry and services. Meanwhile, industrial production increased for a fourth straight month in April by a calendar-adjusted annual rate of 5% and retail sales rose 2.4% y/y.
Bulgaria sold EUR 1.49bn worth of 10-year Eurobonds on June 26, yielding 3.055%, despite bank panic and political uncertainty. Bulgarian President Rossen Plevneliev will dissolve parliament and appoint a caretaker government on Aug 6 to rule until a snap parliamentary election on October 5.