site.btaCrisis Impact on Bulgarian Economy Expected to Be Smaller or Similar to That in Rest of EU, Says Economics Professor 

The structure of the Bulgarian economy allows it to be affected to a lesser degree by economic crises in general, which implies that the impact from the Ukraine war on the Bulgarian economy will be smaller or comparable to that in the rest of the EU, economics professor Stoyan Totev said here Tuesday. He was among the speakers at an international conference on Economic Development and Policies: Realities and Prospects. Challenges and risks in the context of overlapping crises".

The conference was organized by the Institute for Economic Research (IER) with the Bulgarian Academy of Sciences, with the participation of academic researchers and independent experts from Bulgaria, France, Romania and the Czech Republic, Mega Communications reported.

Expectations for Bulgaria are that no entire sector will be seriously affected by the aftershocks from the Ukraine crisis and that there will be no significant changes in the country's comparative advantages. Some industries, though, which used to import raw materials and products from Ukraine and Russia, are likely experiencing problems, Prof. Totev said.

He cited World Bank data showing that the strength of the Bulgarian economy is in the export of products in the food, textile, clothing and metalworking industries, as well as in the export of non-metallic mineral products, The comparative advantages is similar for products in the chemical and furniture industries and in the manufacture of plastic and rubber products. 

Due to the fact that food products are inelastic to substitution, the agricultural sector should be least affected by the crisis – as opposed to the high-tech industries, he explained.

Services are expected to be most affected by the crisis, and the magnitude of the impact will also depend on the duration of the crisis. This sector is known to recover very quickly when the economic situation normalises, the professor added.

A cause of concern is the prospect of a lingering crisis and the impact of that for the tourist and transport sectors, he said.

One major problem for the Bulgarian economy - in addition to it being the least competitive in the EU - is its energy intensity. In the short term, therefore, the war in Ukraine is expected to have a negative impact on industries that use natural gas, and in particular in the marketing of their products. Insofar as similar difficulties will be experienced by other EU countries, Bulgaria cannot be expected to have serious problems at least on the European market, Prof. Totev said.

He argued that the country needs a "sensible" economic policy aimed at encouraging industries that use high tech and benefit from the comparative advantages of the national economy. Another option is to aim for development in the higher segments of the production chain, which allows achieving relatively higher labour productivity even in the low-tech industries Prof. Totev said.