Bulgarian Economy to Contract Less Than Expected

The Bulgarian economy will shrink 4.9% in 2010, Finance Minister Simeon Dyankov said, revising down the government's 2009 forecast of a 6.3% contraction.Gross domestic product (GDP) in nominal terms will be BGN1,0bln higher than the expectations of PM Boyko Borisov's Cabinet that had put the GDP at BGN 63.7bln.

Dyankov said some sectors saw growth in the last months of 2009, such as the textile and chemical industries, mainly thanks to measures the government had taken against the shadow economy. The minister also pointed to improved collection of customs revenues and better efficiency at the National Revenue Agency, which, however, was not at the expense of delayed value-added tax (VAT) returns to business.

If the government is correct in its latest forecast, there could be an extra BGN300m in budget revenues, economists say. According to ex-finance minister Plamen Oresharski, GDP would exceed the previous projections not by BGN1bln but by BGN2bln, adding a further BGN800m in revenues.