The July-August 2017 issue of the Monthly Report on Bulgarian Economy was released. It assesses the short-term dynamics of main economic indicators.

GDP growth accelerated to 4.2% yoy in Q2 2017 driven by both domestic demand and net export. Private consumption growth decelerated to 4.9% yoy in line with developments of real disposable income of households. Gross fixed capital formation went up by 2.9% yoy due to both private and public investment activity. On the supply side, gross value added growth calmed down to 4.0% yoy due to lower growth in services.

Short-term business statistics reported mixed performance in June and July. Industrial production and sales, as well as the construction output index lost speed in June, but then reaccelerated in July. The business climate indicator followed similar path in July and August, respectively.

Employment went up by 0.9% yoy in Q2; its pace of increase decelerated over the previous quarter on the account of a decrease in agricultural employment. The unemployment (LFS) decreased to 6.3% of the labour force, while the participation rate (15-64) went up by 2.4 pps compared to Q2 2016. Registered unemployment declined further to 6.7% as of end-August.

Real productivity growth accelerated to 3.2% yoy in the period. Compensation per employee also gained momentum, up by 9.9% yoy, which led to an increase in nominal unit labour costs, up by 6.5% yoy.

The annual inflation rate (HICP) decelerated to 0.7% in August as the positive contribution from higher food and energy prices continued to narrow. The increase in administered prices accelerated to 2% yoy and accounted for 0.32 pps of the yoy increase in the total index. Core inflation stood at 0.2% yoy.

The current account balance remained positive in the first half of 2017 at 1.3% of projected GDP in spite of the deteriorating trade deficit. The financial account balance came in positive at 0.7% of projected GDP in H1 2017 as the decline in total foreign liabilities surpassed the decline in assets. Inward foreign investment totalled 0.8% of projected GDP.

For seven months in a row, the balance on the consolidated fiscal program was positive, reaching BGN 2 bn (2% of projected GDP) at end-July. The positive fiscal outcome resulted from higher revenues over expenditures on both the national budget and the EU funds account.

The entire document can be downloaded here.