Executive Summary

• Bilateral Trade with India was USD 156.9 mln for January-July 2011. Exports from Bulgaria to India amounted to USD 105.4 mln and exports from India to Bulgaria were USD 51.5 mln in January-July 2011. (The data provided is calculated at the current rate of exchange and as per the monthly figures released by National Statistical Institute (NSI) of Bulgaria and according to the methodology followed by NSI. (In case of exports it is the country of final destination. In case of imports, it is the country of consignment of goods).

• Total Bulgarian Trade for January-July 2011 was US$ 32 838.5 mln with total exports amounting to US$ 15 477.6 mln and imports worth US$ 17 360.9 mln with a negative trade balance of US$ 1883.3 mln.
  
  
• During the period January-June 2011, the top three countries in terms of exports from Bulgaria were Germany (US$ 1668.9 mln) followed by Turkey (US$ 1322.3 mln) and Romania (US$ 1216.7 mln). The top three countries in terms of imports into Bulgaria in this period were Russia (US$ 2858.1 mln) followed by Germany (US$ 1704.0 mln) and Italy (US$ 1126.3 mln).
  
  
• Foreign Direct Investment in Bulgaria for January-July 2011 were Euro 183.8 mln (0.5% of GDP) compared to Euro 775.6 mln (2.2% of GDP) attracted in January-July 2010. The largest net direct investments in Bulgaria for the period January-July 2011 were from the Netherlands (Euro 171.8 million), Luxemburg (Euro 84.1 million) and Russia (Euro 70.2 million). The negative flows were mainly due to net payments on intercompany credits in accordance with the loan repayment schedules of enterprises.

1. Gross Domestic Product and its growth during the most recent quarter:

2. Total trade in US$ and its growth during the most recent quarter:

1. Total trade in US$ to EU and non EU partner countries:

2. Total trade by top ten non EU partner countries:

5. Exports, Imports and growth with non EU partner countries by sections of SITC, rev.4 for the period January-July 2010 and 2011.

Period	2011-Q2
Netherlands	189,7
Luxembourg	101,0
Russian Federation	39,7
France	28,3
Cyprus	26,0
Greece	23,6
Belgium	20,2
Virgin Islands, British	19,1
Turkey	15,9
Liechtenstein	14,3
Romania	7,6
Malta	4,8
Finland	4,1
World (all entities)	187,0

*net total investments after taking into account the negative investment

Foreign Direct Investment in Bulgaria

FDI flows by economic activity - quarterly data (EUR million)

Period	2011-Q2
TOTAL	187,0
Manufacturing	104,9
Real estate, renting and business activities	72,7
Not allocated	62,0
Construction	4,4
Hotels and restaurants	4,4
Transport, storage and communication	3,6
Health and social work	0,1
Other community, social and personal service activities	0,1
Agriculture, hunting and forestry	-0,5
Mining and quarrying	-0,5
Wholesale and retail trade; repair of motor vehicles, motorcycles and personal and household goods	-6,1
Electricity, gas and water supply	-17,3
Financial intermediation	-40,8

* FDI flows with a negative sign indicate that at least one of the three components of FDI (equity capital, reinvested earnings or intra-company loans) is negative and not offset by positive amounts of the remaining components. These are instances of reverse investment or disinvestment.

VII. India's investment interests:

The most prospective sectors for Indian investments in Bulgaria are electronics and information technology; food industry; textile and leather industry; pharmaceuticals; perfumery and cosmetics; joint manufacture of bicycles, motor bikes and automobile spare parts.

Major Trading Agreements proposed/finalized. Impact of these on trade

• A Bulgarian-South Korean business forum was held on 27 September 2011 in the capital Sofia in the frame of the official visit of South Korea's Prime Minister Kim Hwang-sik to the country. The forum was also attended by Bulgarian Prime Minister, Boyko Borisov. Presentations at the forum included economic and investment climate in Bulgaria from the Bulgarian Investment Agency; construction and infrastructure projects from the Road Infrastructure Agency, and a review of the policies of the Ministry of Transport, IT, and Communications on the future online government. The Korean Trade-Investment Promotion Agency (KOTRA) director, Lee Kwan-seok assessed perspectives for partnership with Bulgaria as very strong with possibilities for cooperation in water purification, energy, housing and public buildings construction. Since the beginning of 2011, a Korean company is building a housing complex in Bulgaria. Hyundai Industries and the solar panels in the village of Somovodene in central Bulgaria is an example of successful investment in the country. He listed as key sectors for partnership IT, renewable energy sources, and infrastructure construction. He added that the agreement on free trade between the two countries will boast their relations. Boyko Borisov informed that topics of the negotiations included partnership in the online government, export of grain to Korea, cultural tourism, innovations, education, and infrastructure projects such as the building of a cargo terminal in the southern city of Stara Zagora. The two countries signed on 27 September an agreement for mutual recognition of drivers licenses.
  
  
• Iranian Ambassador to Bulgaria Golamreza Bageri Mogadam said that Iran was interested in building an oil refinery in the Bulgarian Black Sea city of Varna.Iran has 10 functioning oil refineries, and several others are under construction. He added that Iran is ranked second globally by proven oil reserves and is the second largest oil exporter within the Organization of Petroleum Exporting Countries (OPEC).Bulgaria at present has only one operational oil refinery – Lukoil Neftochim – located in the Bulgarian Black Sea port, Burgas. The refinery owned by the Russian energy giant Lukoil is the largest in the Balkans.
  
  
• The first direct flight between Doha and Sofia was launched on 14 September 2011 by Qatar Airways and was welcomed by Bulgarian Prime Minister Boyko Borisov in a ceremony at Sofia International Airport.The flights will give customers the opportunity to transfer to more than 100 destinations worldwide, in particular the Middle East and the Asia Pacific.
  
  
• Minister of Economy, Energy and Tourism Traicho Traikov led a Bulgarian business delegation to Georgia and Azerbaijan from 19-23 September. On 28 September he started his visit to Kazakhstan and Uzbekistan as a part of his tour of countries in the Caucasus - Caspian Region. The possibilities for diversification of energy supplies for Bulgaria were the focus in the agenda of the discussions. Minister Traikov had a meeting with the President of Azerbaijan Ilham Aliyev. The main issue on the agenda of Aliyev's meeting with Traikov was the opportunity for supplying Azeri natural gas to Bulgaria.Bulgaria can receive up to 1 bcm of natural gas per year, which will be made possible after the finalization of the gas grid interconnections with Greece or Turkey.In Georgia, Traikov and Georgian Finance Minister Dimitri Gvindadze unveiled a bilateral Business Forum in Batumi. Minister Traikov visited the oil and gas terminal of the Batumi Port. Traikov's visit to Uzbekistan included meetings with Minister of Economy Galina Saidova, Minister of Foreign Economic Relations, Investments and Trade Ravshan Gulomov. Traikov met with the management of National Holding Company Uzbekneftegaz. In Kazakhstan Traikov met with Deputy Prime Minister and Minister of Industry and New Technologies, Aset Isekeshev, with whom he signed a bilateral agreement on economic cooperation.

9. The principal five export destinations of Bulgaria

Exports	Export Jan-June 2010	Export Jan-June 2011	Change in -%
Germany	1029,8	1668,9	62,1
Turkey	845,9	1322,3	56,3
Romania	783,3	1216,7	55,3
Italy	1014,6	1130,1	11,4
Greece	822,6	902,9	9,8
India	34,7	68,2	96,5
Total Bulgarian Exports	9801	13760,2	40,4

9. The principal five import sources of Bulgaria

Imports	Import Jan-June 2010	Import Jan-June 2011	Change in -%
Russia	1988,9	2858,1	43,7
Germany	1424,8	1704,0	19,6
Italy	907,9	1126,3	24,1
Romania	884,5	1081,8	22,3
Greece	694,6	931,3	34,1
India	30,4	43,3	42,4
Total Bulgarian Imports	12480,7	15418,8	23,5

9. Economic Developments in Bulgaria during this reporting period

• The Fall International Technical Fair was held in Bulgaria's second largest city of Plovdiv from September 26 to October 1, 2011. Thefair featured seven car models of the Chinese Company Great Wall to be manufactured in its Bulgarian plant in the city of Lovech.BMW showed for the first time in Bulgaria its 1 Series with 5 doors in a sports urban version and its 6 Series Coupe 650i. Nissan displayed the 4th generation of its Micra and Mini – its new Coupe Cooper S.Fiat 500 new TwinAir engine won the title "International Engine of the Year 2011”.

• Central Bank data showed that Bulgaria attracted Euro 183.8 million in foreign direct investments in the first seven months of 2011 compared to Euro 776 million the same period last year.The most noticeable withdrawal of capitals is performed by companies in Germany, Great Britain and Japan. The top investors in Bulgaria now are the Netherlands, Cyprus and Russia.Analysts have attributed the negative trend to the crisis - the uncertainty reigning in the euro area and the European Union as a whole, the government's conflicting messages, deteriorating public finances and outstanding payments on intercompany loans.They have expressed serious doubts that the forecast of 3.6% growth projected by the Bulgarian government in its 2011 budget is realistic.

• According to the Fraser Institute's Freedom of the World report Bulgaria has turned into a more economically free state to conduct business since the beginning of the year.The report assesses individual countries according to 42 criteria including the percentage of the economy accounted for by Government activity, the presence of price controls, the legal structure and security of property rights, the freedom to trade, and the regulation of credit and business.The main reason for Bulgaria's better performance is the access to safe and stable money and in particular the indicators linked to inflation. Bulgaria also saw a better score in terms of the size of government, which means that now it has lower government spending, fewer state-owned companies, lower taxes and stable money.

• Data from the analysis of the Bulgarian Industrial Association (BIA) showed that currently there are two disturbing trends on the labour market in the country. There is a constant decline in the number of the active population and a parallel increase in the unemployed labour force. In the second quarter of 2011 alone, the active population decreased by over 42,000 people on an annual basis. In the last two years, the decline in employment was substantial as well, compared to the EU average. According to BIA, some 42% of the companies are facing difficulties in finding suitable people for key positions and there is a chronic shortage of doctors, nurses, orderlies, and IT specialists on the labour market.
  
  
• On 2nd September 2011, the Supervisory Council of the Privatization and Post-privatization Control Agency approved the sale of a 79.8% stake inBulgartabac for EUR 100.1 million to BT Invest, a firm registered in Austria by VTB bank, property of the Russian government.The price offered by BT Invest, the sole bidder standing, after several major players withdrew, is EUR 100.1 million with the commitment to purchase 5 000 metric tons of Bulgarian tobacco a year (about 14% of the crop). The contract also includes a clause banning a resale in the next 5 years. According to the minister of Economy, Energy and Tourism Traicho Traikov, Bulgartabac acquisition by VTB may prove to be more profitable for the holding than expected, as the new owner will most probably first modernize it and then resell it to strategic investors.Two of the less profitable plants of Bulgartabac holding - in the cities of Plovdiv and Stara Zagora, were sold in 2009 through the Sofia Stock Exchange - for BGN 31 million and BGN 18 million respectively.The holding currently owns the two larger and more consolidated factories in Sofia and Blagoevgrad as well as a number of commercial brands.

9. Other news items of interest

• Bulgaria’s Minister of Agriculture Miroslav Naydenov has taken part in a meeting of the EU Agriculture Council in Poland on 13 September 2011 and said that it was essential for the EU policies for promoting agricultural products on external markets to contribute to improving the image and expanding the influence of the Bloc in third countries. He stressed on Bulgaria’s huge interest in promoting the country’s traditional rose oil in third countries.
  
  
• Georgi Angelov, Senior Economist with the Open Society Institute – Sofia commented that the Currency Board regime in which Bulgaria operates enjoys great public support, and people prefer to use the lev instead of switching to the euro, even though the local currency is pegged to the euro. Finance Minister Simeon Djankov stated that Bulgaria remains committed to adopting the euro as quickly as possible. Scheduled initially for 2010, the country's entry into the eurozone was postponed for 2012 with experts saying it is dependent on continued fiscal prudence and lower inflation. Finance Minister Simeon Djankov's belt-tightening policy however has drawn criticism of creating the illusion of a healthy economy on the back of the people, who are three times poorer than the average EU citizens.
  
  
• Airline tickets in Bulgaria will become costlier due to a new security fee.The fee is to be introduced in 2012, after Parliament adopted the amendments to the Civil Aviation Act. The new fee will add 8% to the airport taxes, being paid by the passenger i.e around Euro 13 while departing Sofia Airport.