Exports of Bulgarian goods rose by 7.6% on an annual basis in April, according to preliminary data from the National Statistical Institute (NSI). In comparison, the annual increase in March was nearly three times that (18.8%) as a result of strong exports to countries both in the EU and outside the bloc.
However, while the growth rate of sales to non-EU countries reached an impressive 28.3%, the value of goods sold to EU member states declined for the first time since January of last year, by 1.3%. The reason behind the fall will remain unknown until July as detailed statistics regarding exports to the EU are released by the NSI with a month's delay relative to non-EU nations.
That being said, there are specifics with regard to the main factors driving the growth of exports to third countries, namely oil and copper products. More specifically, the international prices of the two commodities have increased significantly this year relative to the 2016 levels, which raises the value of goods sold. Additionally, an extra boost stems from higher export volumes.
At the same time, imports from non-EU countries also increased significantly in April, by 29% year on year. The sharp rise is no surprise, as it was forecasted by both independemt experts and international institutions, and the explanation can be found in the labor market. More specifically, growing employment and the drop in the number of unemployed, combined with labor shortages in almost all sectors of the economy, have resulted in average wage increases of up to 8-10 percent in the past several quarters. As a consequence of rising purchasing power, households have spent their extra money not just on more goods made in Bulgaria, boosting GDP through consumption, but on imported ones as well.
Total Bulgarian exports exceeded 3.9 billion levs in April, of which 2.5 billion levs came from sales to EU member states.
Oil products have remained one of the main growth drivers of exports to non-EU countries since the start of the year. The contribution of oil products to the growth rate in April was 12.7 percentage points, close to half of the annual rate of increase. While a year ago the value of exported oil products was a little over 127 mln levs, in April of this year it was double that. Partly because of higher volumes sold abroad, but more importantly, due to a rise in international prices as a direct result of OPEC's decision in late November 2016 to cut output.
Metals were another key factor, with copper products in particular, which contributed 8.7 percentage points to the rate of growth. Again, the explanation lies in both higher international prices and export quantities relative to the same period last year. There are several reasons behind the increase in copper prices since late 2016. On the demand side, China published better-than-expected economic data, which gave rise to expectations of increased demand for copper (used in electrical wiring, for example). On the other hand, supply shrank due to strikes in several of the world's biggest copper mines, falling investments and the closure of expensive, polluting mines, according to a report of the International Monetary Fund.
Main non-EU export destinations
Turkey was the biggest market for Bulgarian goods outside the EU in the period January-April of 2017, absorbing 1.4 bln levs worth of Bulgarian exports. Of that amount, a little over 400 million levs came from sales of oil products, 190 million levs from sales of copper products, while a further 155 million levs of export revenue came from sales of electrical machines and parts. China was a distant second with 409.6 million levs, of which three quarters were generated from sales of copper products. Egypt followed with 348.2 million levs (mainly oil products).
The deficit in Bulgaria's trade with third countries increased to 872.9 million levs in the first four months of the year from 92.7 million in the corresponding period of 2016. Although exports increased substantially relative to 2016, imports grew faster, widening the trade gap.