Eurobank EFG Group predicted a gradual recovery of the Bulgarian economy driven by gradually improving domestic demand dynamics at the traditional “Euromoney” conference for Central and Eastern Europe. According to the group’s forecast GDP growth in 2011 will be 2.5% and the first visible signs of revival are expected in the second half of the year. The spillovers of the strong export performance are going to diffuse in other industries as well, so that a more balanced pattern of growth will slowly unfold in the coming quarters. On top of that, the improved absorption of EU funds could support investments recovery as well.
“The Bulgarian economy is recovering slowly after having seen the worst of the recession in last quarter of 2009. While domestic demand still remains weak, Bulgaria seems to be successfully addressing the key challenge of rebalancing its economy”, stated Gikas Hardouvelis, Group Chief Economist The shift to a new economic development model from the previous credit-driven and consumption-based model of development to a new one, emphasizing competitiveness and exports has been taking place during 2010 in a painful, yet orderly manner, according to Mr. Hardouvelis “It is important to note that the transition is taking place under a fixed exchange regime. The currency board constrains monetary policy in such a way that the option of devaluation of the local currency to regain competitiveness is not available”, added Mr. Hardouvelis.
Mr. Giorgio Pradelli, General Manager, Head of International Activities of Eurobank EFG noted that the growth of the real economy is a key factor for the economy recovery of the region. “The funding model has changed – now funding is done domestically. We cannot rely on previous levels of credit growth so banks are implementing a key change in their business model by focusing on cross selling, transactional banking and strengthening relationships with clients” he said..
Eurobank EFG is a traditional partner of Euromoney conference, devoted to Central and Eastern Europe, which annually takes place in Vienna. Group representatives participated in the forum once again this year. The group also hosted a panel dedicated to “Growth in Times of Fiscal Austerity “, moderated by its chief economist Gikas Hardouvelis with the participation of Meglena Plugtschieva, Special Adviser to the Vienna Initiative at the EBRD, representatives of IMF, EBRD, World bank and the Greek government. The panel was dedicated to stimulating growth in the face of the unpopular fiscal policies many governments in New Europe are currently pursuing in order to maintain macroeconomic stability.
