Economy Grows 3.6% in Q2, Salaries Go Up

The economy grew by 3.6% in the second quarter of 2017, the average gross salary increased by 9.9% and the employment rate in Bulgaria is record high since the years before the crisis, according to data of the National Statistical Institute (NSI).

GDP

Bulgaria’s Gross Domestic Product (GDP) increased by 3.6% year-on-year in the second quarter of 2017. There was also an increase by 0.9% compared to the first quarter of this year. According to the Institute’s flash estimates GDP in nominal terms reached BGN 24 309 million. Consumer expenditure registered a growth of 4.2%. Exports and imports of goods and services also rose – by 6.1% and 7.0%, respectively.

With this positive trend, Bulgaria stands well among the other countries in the fastest growing region in the EU – Central and Eastern Europe. The Czech Republic (4.5%) and Romania, which again has an increase of 5.7% on an annual basis, are ahead of us.

As in the first quarter, domestic consumption was the leading factor for the economic growth, which went up by 4.2% year-on-year in the second quarter of 2017. This was again probably mainly due to households, rising incomes of the population, rising employment and falling unemployment. The BNB expects the positive trends to continue in the period 2018-2019, thus keeping private consumption as the main driver of economic growth.

Significant salary growth

The latest NSI data show an annual growth of 9.9% in the average gross salary in the country in the second quarter of 2017. This is the largest increase since 2009, at least in terms of the nominal salary growth. Total income per person per household in the second quarter amounted to BGN 1 355. The highest relative share of income was from salaries (56.7%), followed by income from pensions (26.3%), from self-employment (6.8%) and from benefits and social assistance (3.4%).

The percentage change in the sources of income compared to the previous quarter is as follows:

• Salary income rose to BGN 769 BGN (by 13.3%) from BGN 679.
• Income from pensions decreased to BGN 356 (by 1.8%) from BGN 363.
• Income from self-employment increased to BGN 93 (by 25.4%) from BGN 74.
• Income from social assistance and benefits increased to BGN 46 (by 2.8%) from BGN 45.

Despite the slight slowdown in the rate of salary increase, the trend for sustainable salary growth remains clearly visible. This is largely due to the salary growth in the private sector. The reason for this is the growing shortage of skilled labor force. According to inconclusive data of Eurostat, a total of 34.9% of the industrial enterprises in Bulgaria have such shortages compared to 15.8% for the EU.

A more detailed analysis can be found here.

Employment hits record high

The number of employed people in Bulgaria increased by 138 thousand compared to the same period in 2016. The employment rate in Bulgaria is the highest since the crisis. According to NSI data, employees over the age of 15 years total 3.171 million people.

In the second quarter of 2017, 63.1% of all employees (around 2 million) worked in the service sector. A total of 933.9 thousand people (29.4%) were employed in industry and 236.1 thousand (7.4%) in agriculture, forestry and fisheries. Of all employed 3.7% (118.2 thousand) were employers, 7.4% (233.6 thousand) – self-employed (excluding employees), 88.0% (2 792.4 thousand) – employees and 0.9% (27.5 thousand) unpaid family workers. Of the total number of employees, 2,128 million (76.2%) worked in the private sector and 664.5 thousand (23.8%) in the public sector. The temporary employed were 141.7 thousand, or 5.1% of all the employed.

The largest growth was registered for the employed in culture, sports and entertainment (9%), ICT sector (5.1%) and real estate operations (4.2%). The economic activities which employ most people (manufacturing and commerce) continue to grow at a similar or faster pace than the country average and currently employ nearly 39% of all employees in the economy, and monthly remuneration (BGN 924 in manufacturing and BGN 986 in trade) is gradually approaching the average for the country BGN 1040.

The full text of the labor force survey for the second quarter of 2017 of the NSI can be found here.