1. Bulgaria: political uncertainty
weighs on growth but financial
stability maintained
Dieter Franceus
GCE

2. 2
Bulgaria
Political uncertainty
Parties in Parliament
( number of seats)
GERB 97
BSP
84
MRF 36
Attack
23
 Demonstrations in late February against high
electricity prices triggered the resignation of
the government of the center-right ruling party
GERB.
 May elections produced a divided parliament.
Former opposition parties BSP (former
communists) and Movement for Rights and
Freedom (MRF, mainly supported by the
ethnic Turkish minority) agreed on a coalition,
but lacked majority with 120 seats out of 240.
Therefore the government depends on the
implicit support of the small ultranationalist
party Attack.
 This weak center-left government has already
lost legitimacy after some highly controversial
appointments.
 This has triggered again large-scale protests
but the government refuses to resign.

3. 3
Bulgaria
Disappointing growth
0.1% decrease of Q2 real GDP vs. Q1
(Qoqa, in % )
Negative momentum going into Q3
(Qoqa, in %)
-10
-8
-6
-4
-2
0
2
4
6
8
10
Q4 2010 Q2 2011 Q4 2011 Q2 2012 Q4 2012 Q2 2013
Private consumption Government consumption
Investments Net exports
Inventory and errors GDP growth
-10
-5
0
5
10
15
Industrial production Retail sales Export

4. 4
Bulgaria
Financial stability maintained
Fiscal reserve
(% of GDP)
Government bond yields
(in %)
0
2
4
6
8
10
12
14
0
1
2
3
4
5
6
Bulgaria
Germany
Headline CPI (year-on-year, in %)

5. 5
-5
-4
-3
-2
-1
0
1
2
3
General budget balance
Cyclically adjusted
Structural balance 0
10
20
30
40
50
60
70
Budget balance
(% of GDP)
Gross government debt
(% of GDP)
Source: European Commission Source: European Commission
Bulgaria
Strong fiscal fundamentals

6. 6
Current account
(% of GDP)
Financial account
(% of GDP)
-35
-30
-25
-20
-15
-10
-5
0
5
10
15
Goods Services
Income Current transfers
Current account
-30
-20
-10
0
10
20
30
40
50
Direct investments Portfolio investments
Other investments International reserves
Current account
Source: Eurostat Source: Eurostat
Bulgaria
Solid external position