Analysis of Kristofor Pavlov, Chief Economist of UniCredit for Bulgaria.

The Bulgarian economy is shifting from a growth model dependent on domestic demand to such where export plays a bigger role. That presupposes a new role of lending in economic growth, said Kristofor Pavlov, Chief Economist of UniCredit Bulbank, at the conference on Lending as a Driver of Economic Growth, organized by The Banker Daily.

An important consequence of the change in the economic growth model is the reduction of external indebtedness, according to the economist. “Unlike the period before 2008, today the acceleration of GDP is not at the expense of the appearance of new or the aggravation of existing macroeconomic imbalances”, commented Pavlov.

According to him, these changes lead to a change in the role of bank loans. He pointed out that in the period before 2008 lending was growing significantly. Between 2000 and 2008, for example, said growth was by 37% p.a. on average, starting from a low base, whereas the nominal growth of the economy was around 13% p.a., hence indebtedness increased. “A scenario where as in the pre-crisis period the economy sees a lending growth which outpaces the GDP growth by far, is unwanted in the economy.“, said Kristofor Pavlov.

The current level of lending is due to different factors. On the one hand in general the Bulgarian economy is specialized in manufacturing niches which are rather labor consuming and do not require so significant investments in new machines and facilities. Another factor is the cautiousness of borrowers, who need greater confidence in the economy in order to consume or to invest.

More information for media:

UniCredit Bulbank, Identity & Communications Department

Viktoria Blajeva, Phone: + 359 2 9264 993, wjlj/ebwjepwbAvojdsfejuhspvq/ch

Beatris Nikolova, Phone: +359 2 9232 528, cfbusjt/ojlpmpwbAvojdsfejuhspvq/ch