This report covers the key macroeconomic and financial releases as well as the political events from Bulgaria for the period of November 6, 2014 - December 5, 2014.

Parliament approved in early November a minority coalition government of CEDB and the Reformist Bloc. The ABV and the Patriotic Front have pledged to support the cabinet of prime minister Boyko Borissov in the legislature. Soon after the new government took office the statistics office released its second estimates on the country's GDP growth.

The economy expanded by 1.5% y/y in the third quarter, less than the flash estimate's 1.6% and below the 1.8% growth in Q2. The growth momentum of final demand slowed in Q3 as domestic consumption expanded by only 0.8%, compared to a rise of 1.2% in the previous quarter. The second estimate figure is below the 1.4% growth that was reported initially.

Looking forward, the economy will not pick up pace, according to the finance ministry, which lowered further its 2015 economic growth projection to 0.8% from October’s 1.2% on slowdown in domestic demand and subdued exports growth.
Meanwhile, the unemployment rate (age 15 and more) fell by 1.2pps y/y to 10.8% in the third quarter, reaching its lowest level in three years but the consumer confidence indicator weakened to -37.2 in October after declining to -34.3 in July.

The fiscal plan of the previous government proved unachievable, with the actual budget deficit exceeding the original year-end target by more than two times already in October. The new administration plans to reduce the gap down to 3% of GDP in 2015 from 3.7% in 2014 through a combination of tax hikes and spending cuts in hopes to avoid entering into the EC's excessive deficit procedure.

Key points:
• Business confidence rebounds in November
• Higher electricity bills soften Bulgaria's CPI deflation to 0.4% y/y in October
• Banking sector net profit grows 32% y/y to €344.3mn in Jan-Oct
• Bank deposits down 3% y/y to €32.3bn at end-October
• FDI in Bulgaria shrink 4.8% y/y to €1.1bn in Jan-Sept