EC warns Bulgaria of macroeconomic imbalances

A special report of the European Commission (EC) recommended a thorough review of the development of macroeconomic imbalances in Bulgaria and another 13 countries of the European Union (EU). Countries face different challenges. One of the biggest weaknesses of the Bulgarian economy, highlighted in EU's report, is the sharp fall in foreign investment. Another threat for Bulgaria in recent years is the loss of foreign markets.

According to the report, lending to the private sector remains weak in all countries. Thus, on the one hand, banks increase their capital adequacy, but, on the other hand, a lot of requests for loans from small businesses remain unanswered because of the uncertainty of the economic environment.

In the long run, Bulgaria is under the threat of weak points in the labour market and rising unemployment, as well as high structural unemployment.

In May 2012, the EC warned Bulgaria of imbalances associated primarily with business indebtedness and labour market situation. Some indicators, such as foreign investment and labour costs, also aroused concerns at the time.

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