Bulgarian Economy
Excellent Business Environment
Located in South Eastern Europe , Bulgaria is ideally positioned between the world’s major trading blocks of the EU and Asia . Bordered by Romania , Serbia , Macedonia , Greece , Turkey and the Black Sea . Over the last· 8 years· Bulgaria has been a vibrant· and high· growth· economy that has enjoyed one of the most productive· and successful periods of its entire· history· . Whilst growth· in GDP has fallen in line· with the rest· of Europe , we believe· it is well positioned to move· forward again soon .
Bulgaria has amongst the lowest business· costs (including taxes) in Europe . Corporation tax for example· is only 10 % and so too is income· tax . Highly attractive tax incentives are available for inward investment· which the Fund will be· looking to take· advantage· of .
Businesses can choose· from a well educated , multilingual and arguably the cheapest workforce· in Europe . In particular· , it has strengths in information technology , maths , engineering and specialized science· . It also has the 8 th highest number· of IT specialists in the World and is the 1 st ranked in Europe for outsourcing IT work· .
All of this has led to a major influx of multinational corporations that continues to this day and includes Microsoft, Deutsche Bank, Google, Nokia, Hewlett Packard and PWC.
Much needed restructuring has been done.
Bulgaria has undergone a massive· denationalisation of state· industries to the point· where it is now a fully functioning privatized free· market economy .
The legal· system· has undergone much needed reforms to counter· corruption· which affected most ex-communist countries .
Security
A full· member of the European Union since January 1 st 2007 , Bulgaria is also receiving considerable economic and structural funding from Brussels to assimilate· Bulgaria to the EU in terms of economic performance· and infrastructure· .
Member of NATO since April 2004.
Bulgaria has been a parliamentary democracy· since 1989 and has undergone multiple peaceful·transitions of power· since that time· .
Stable currency· which is pegged to the Euro .
Set to become· a member of the Schengen Area of Europe in March 2011 .
Bulgarian Economy
Bulgarian economy has posted positive· GDP growth· every year since 1998 since which time· it has been under the auspices· of the IMF . The last· five years· has seen average· growth· in excess· of 6 % . Last year saw growth· of 7.1 % against a growth· forecast· of 5.8 % . Whilst GDP will fall· in 2009 (which is to be· expected inline with the rest· of Europe) it is expected to stabilise in 2010 and grow· in 2011 .
The Bulgarian government· used the recent period· of economic growth· to strengthen· its financial position· , and budget surpluses averaged 2.7 % of GDP between 2004 and 2008 , debt· on GDP base·declined to 14 % , and a significant· fiscal reserve· was accumulated .
Inflation will continue· to trend· down from the high· rate· in 2008 as domestic demand· pressures ease· , food· inflation· drops and world oil prices remain· low· relative· to 2008 . Inflation is forecast· to average· 3.2 % in 2009 and 3 % in 2010 .
This will allow· the government· to reduce· interest· rates to stimulate· the economy and also is vital to Bulgaria adopting the Euro in the future· .
STRONG AND Steady Banking Sector
The current world financial crisis· has made a significant· impact· on the availability of credit· in most economies , slowing growth· and leading to major slowdowns in property· markets . The Bulgarian banking sector presently appears to be· in reasonably good· shape· , with relatively high· capital· adequacy and liquidity ratios by international standards .
Bulgarian banks , unlike western banks , operate· traditional lending practices and did not engage· in esoteric lending practices . Secondly , Bulgaria had a financial crisis· in 1997 and ever since it has tread· a relatively cautious line· . For example· , in Western European States , banks wait· 180 days to consider· a loan a bad loan; in Bulgaria a loan is considered bad any time· between 30 to 90 days . Two years· ago , the Bulgarian Central Bank decided to increase· the minimum bank· reserves· from 8 % to 12 % . At that time· the measure· was criticized as being overprotective but has proved to be· highly successful . It currently sits at 16.9 % and whilst this figure· may fall· slightly in the near future· , it will still be· well above the 8 % mandatory· level· of adequacy set by the European Union .