site.btaEconomic Activity Indicator Slightly Decreases in Q3

In the third quarter of 2022, Bulgaria's Economic Activity Indicator (EAI) slightly decreased (to 0.51, from 0.67 in Q2), the Bulgarian National Bank reported on December 6. The decline in the cyclical component which began in the second half of the previous year deepened further to 0 in Q3 and was the main driver for the EAI downward movement. Thus, the preliminary estimate of the composite indicator continued to point to an economic expansion in Q3 but with a decelerating trend.

The EAI deterioration in Q3 reflected to a large extent the externally driven indicators presented with the real GDP growth and industrial production index in EU 27. In the following quarters, these developments may have a negative impact on the country's indicators which are predominantly exposed to the external environment (index of industrial production, provision of industrial orders and price expectations in the industry) but it has not been evidenced by the reported data yet. The estimated contribution from the related domestic activity variables such as employed and overall business climate remained neutral.

Over Q3 of 2022, the estimated cyclical position of the composite indicator in the euro area EUR- coin turned into negative territory. The signals for economic weakness in the euro area, which started in June deepened further and EUR-coin reached a negative value in September, the lowest level since September 2020. Its current development mainly reflected the drop in euro-area consumer and business confidence and a reduction in industrial production. These factors are expected to have a restrictive influence on the cyclical EAI position.

The preliminary estimate for EAI signaled a slowdown in the country's economic activity while real GDP growth in Q3 is estimated to remain close to the reported rates in the first half of the year.