Bulgaria lags most visibly on the way to catching up with the European Union standard. This is what the per capita purchasing power parity indicators speak for.
A report by the Institute for Market Economy (IPI) shows that 20 years ago there were only two countries with a coefficient above 70% on this indicator. These are the Czech Republic and Slovenia. For the other countries that joined the European Union in 2004 and 2007 – Estonia, Latvia, Lithuania, Poland, Slovakia, Hungary, Romania and Bulgaria – the indicator is below the threshold of 70% of the average European level. In four countries it is even below 50%, as is precisely the case with Bulgaria and Romania. To date, all countries are above 70% except for Bulgaria, which is the last to chase this limit and is currently at 64%.
This transformation can happen even faster. Our convergence is still lagging behind,” commented IPI senior researcher Petar Ganev during the first forum of the Institute “Growth in Turbulent Times”.
He drew attention to the fact that most CEE countries are losing their status as low-indebted economies. In addition, in the last decade there has been a process of deterioration of economic freedom against the background of the overall stagnation of this indicator in the EU.
Bulgaria’s progress is the result of economic growth in this period, bearing in mind that Bulgaria passed through the crisis years “relatively successfully”.
We did not fail macroeconomically. The reason for the convergence is that we manage to successfully pass through various crises without collapsing anything macro-economically,” said Ganev.
He also emphasized Bulgaria’s progress over the last 20 years in terms of its own export and its doubling as a share of all intra-Community trade – from 0.24% to 0.73%.
Not only is exports growing, for which inflationary processes play a huge role, but it is also growing as a share of GDP and as a share of intra-community trade, i.e. our weight in trade in Europe is growing. This is happening thanks to the transformation of the economy, of the industry – fewer people are employed in the sewing industry and more in the automotive industry, for example,” Ganev also pointed out.
According to the economist Rumen Avramov, who was part of the Management Board of the BNB, with the current parameters of our economy, the alignment with the standard of living of the EU is far from close and
maybe we’ll need two more decades for that.”
He outlined several barriers to convergence, such as insufficient capacity to adapt and change.
A major obstacle to the faster growth of the Bulgarian economy there is also a lack of progress regarding…
…the rule of law
Economist Krasen Stanchev described the damages related to investments in Bulgaria by the judicial system. He recalled data for the period 2007-2018, according to which damages from lawsuits for failed and delayed investments are 2 times more than the damages from natural disasters and accidents for the period.
If you collect them over a period of 10 years, blocked investments for around 4-5 billion euros are obtained,” Stanchev reminded and emphasized that “we must know what the damages are from the judicial system – if we don’t know them, we will sit in this position in the economic freedom index’.
