Bulgaria’s private sector loans rose by 13.7% in April

Lending to the private sector accelerated in April, rising 13.7% year-on-year from 12.9% a month earlier, the Finance Ministry’s European Affairs and Economic Analysis Directorate said in its Monthly Report on the Bulgarian Economy on Tuesday. All credit segments continued to grow steadily, with corporate lending up 8.6% from 8.2% year-on-year in March.

Over the month, corporate overdrafts accelerated slightly in line with the improvement in the business climate indicator, while the decline in bad and restructured loans was smaller compared to the decline in April 2023. Corporate overdrafts accelerated slightly in line with the improvement in the business climate indicator, while the decline in bad and restructured loans was smaller compared to the decline in April 2023. Household loans continued to accelerate to 18.6% y/y, from 17.5% y/y. The main drivers of their dynamics were again consumer and mortgage loans, which continued to accelerate, by 14% and 23.9% y/y, respectively, the report said.

The report provided further economic data. GDP growth was 1.9% year-on-year in the first quarter. All sectors, except inventory changes, contributed positively to this growth. Household consumption growth accelerated to 3.7%, supported by solid growth in real disposable income. Gross fixed capital formation increased by 8.4%, driven mainly by investment in machinery and equipment. Exports of goods and services fell by 2.5%, outweighed by a 3.9% decline in imports.

The Harmonized Index of Consumer Prices (HICP) shows that inflation was 0% in May, indicating that the overall level of consumer prices remained stable compared with the previous month.

The annual HICP inflation rate accelerated by 0.2 percentage points to 2.7% in May. Analysts attribute this mainly to higher year-on-year growth in energy prices, from 1.7% in April to 2.6% in May 2024, largely due to the underlying impact of transport fuel prices.

Transport fuel prices fell 2% m/m in May, a less significant decline compared to a sharper 3.8% decline in May 2023, which subsequently accelerated their annual inflation rate. Core inflation also rose to 3% y/y in May from 2.5% in April. This was mainly due to dynamics in services, particularly those in the transport sector.