site.btaAvenues for Economic Growth and Readiness for Eurozone Featured on Agenda of Sofia-hosted Forum

The development of the economy and growth opportunities, as well as the readiness of the banking system and capital market participants for the eurozone, were among the topics discussed at the Investor Finance Forum in Sofia, organized by Investor.bg on Tuesday.

Commenting on the challenges to growth, Fiscal Council member Lyubomir Datsov noted that “the big problem is called Europe.” “We are fully integrated in terms of external trade with Europe, and all these challenges and problems, from slow growth in Europe to overregulation, which clearly hinders economic development, present obstacles to the overall environment and direction for development,” he said. “Currently, we are in a political situation where we understand why central bankers for several years have been sending the message that monetary and fiscal policy must go hand in hand. One of the major problems in Europe is that monetary policy currently has almost no tools to stimulate growth,” Datsov added.

Datsov also said that Bulgaria will be the only country in Europe entering the eurozone where growth is expected to be lower than the previous year, inflation significantly higher, and investment lower. “The combination of macroeconomic imbalances, which are becoming visible now, is compounded by another problem — the inefficiency of public finances,” Datsov noted.

The Chief Economist at the Institute for Market Economics, Luchezar Bogdanov, said that for many years we took for granted that growth was inevitable and that catching up was guaranteed. However, data from Eastern Europe show that not a single post-communist Eastern European country has reached the EU’s average GDP per capita, calculated at purchasing power parity. “Many countries achieve impressive progress during certain periods, but the richest Eastern European countries hit a ceiling of around 90–92% of the EU average, while other countries stopped progressing earlier,” he explained.

“We are still below 70%, and with the current growth model, there is still much to be done - attracting industrial investors, expanding the financial sector, adding new high value-added services, and restructuring the economy,” he noted. According to him, Bulgaria still has several years of potential for growth, for attracting investors, and for improving competitiveness. Beyond that, the major challenge will be whether these limitations might hold us back, and whether we can remain part of the growth trajectory.

Asen Yagodin, Deputy Chief Executive Officer of Postbank, noted that the banking system in Bulgaria is one of the most highly developed sectors of the country’s economy, largely because it was among the first sectors to begin reforming according to global standards. According to him, the role of Bulgarian banks will even increase with the country’s entry into the eurozone, and one of the key factors for Bulgaria’s overall prosperity within the eurozone will be their support.