2014-03-18 14:18:27 - Recently published research from Business Monitor International, "Bulgaria Freight Transport Report 2014", is now available at Fast Market Research
Political instability in Bulgaria will continue to stifle private consumption and investment, weighing on headline growth through 2014 and proving detrimental to the country's freight industry. Despite government expenditures and a positive contribution from net exports propping up economic activity, real GDP growth will reach just 0.5% and 1.5% in 2013 and 2014 respectively.
The effect of political instability in Bulgaria is evident in Q2 2013 data, with weak investment and private consumption leading to the first year-on-year (y-o-y) contraction of real GDP since 2010. The mass protest movement that spurred early elections has largely subsided, though demonstrations are ongoing and antigovernment sentiment remains pervasive. While a measured rebound in consumer and business sentiment should take hold in the remainder of
H213 and build momentum behind economic activity heading into 2014, lingering unrest and uncertainty will contribute to subdued headline GDP growth readings for several more quarters.
Full Report Details at
- www.fastmr.com/prod/779458_bulgaria_freight_transport_report_201 ..
A slowdown in domestic economic activity and foreign capital inflows is expediting a rebalancing of Bulgaria's external accounts, with the current account set to post a surplus of 0.4% of and 0.7% of GDP in 2013 and 2014 respectively, before narrowing gradually over the long term. Although we caution that a return to deficit could materialise in coming years as domestic demand growth accelerates and cross-border investment flows pick up, the limited potential for sizeable financial account surpluses implies that any future current account shortfalls will remain at relatively low levels. This will preclude a return to the massive external imbalances seen before the onset of the global financial crisis.
While 2014 is not set to be a remarkable year for Bulgaria's freight industry, the large contractions in growth that peppered the latter years of the '00s and the early '10s look to be a thing of the past, which is welcome news going into the midterm.
Headline Industry Data
* 2014 tonnage throughput at the Port of Varna is forecast to grow by 5.32% to 11.22mn tonnes.
* 2014 air freight tonnage forecast to grow by 1.54% to reach 18,530 tonnes.
* 2014 rail freight tonnage forecast to increase by 2.90% to hit 12.32mn tonnes.
* 2014 road freight tonnage forecast to rise by 3.51% to reach 149.55mn tonnes
* 2014 total trade (real terms) forecast to rise 5.47%.
Key Industry Trends
Bulgaria And Turkey Clash Over Border Checks - Bulgarian and Turkish authorities have clashed over Turkey's decision to extend border checks on incoming vehicles, reported the Handy Shipping Guide in May 2013. More stringent Turkish border controls caused a large backlog of trucks at the Kapitan Andreevo crossing. Turkey is allegedly unhappy that 80% of road freight between the two countries is being undertaken by Bulgarian vehicles.
GBS-Sofia Secures Central Railway Station Renovation Contract - A consortium comprising Glavbolgarstroy, Vodstroy 98 and Industrial Construction Holding has secured a contract worth BGN55.96mn (US$38.22mn) to renovate the Central Railway Station in Sofia. Under the renovation plan, the station would be equipped with an energy independent, high-tech and energy-efficient air conditioning system, while the landscape around the station will be completely transformed and the platforms and escalators will be replaced. The station would be fully operational during the rehabilitation. The renovation work is expected to be completed in Autumn-2015.
Varna Throughput Slowing - Over the medium term, we project throughput levels at the port of Varna to tick up, with container throughput forecast to recover to pre-downturn levels. The port faces tough competition both domestically from the port of Burgas and regionally, as Varna is relatively small when measured against its Black Sea peers. We do however highlight that there is potential for expansion in the port's role over the medium to long term, with the Bulgarian government planning to tender the port of Varna's container facilities.
Key Risks To Outlook
China has expressed an interest in investing in Bulgaria, specifically on infrastructure projects and on the country's rail network, according to Bulgarian Prime Minister Plamen Oresharski in September 2013. Following a meeting with the Chair of the State Council of the People Republic of China, Li Keqiang, Oresharski declared his desire to boost trade cooperation with the Chinese
In terms of political risks to our forecasts, authorities arrested six people after clashes erupted between police and protesters during a rally in Sofia on October 8 2013, following the constitutional court's decision to allow media tycoon Delyan Peevski to return to parliament as an MP. Peevski's appointment as head of the country's national security agency on June 14 triggered mass protests across the country, with the row continuing even after the cancellation of the appointment. The decision appears to have led to a re- escalation of protests and anti-government sentiment, and bolsters our view that political risk will remain elevated, with fresh elections likely in 2014.
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