Архів / Archive

Trifonova Silvia

PhD Assoc. Prof.

University of National and World Economy (UNWE)

Sofia, Bulgaria

WHERE IS BULGARIA IN WORLD EXPORTS?

Bulgarian economy is a small, open economy. During the last 2013 year gradual improvement was observed in the external economic environment. Developed economies contributed most to this improvement. As a result net exports of goods and services were the key driver of the Bulgarian economy during this period. Net exports contributed most to the real gross domestic product (GDP) growth of Bulgaria. Real GDP growth of Bulgaria accelerated to 0.9% in 2013 from 0.6% in 2012.[1] Bulgarian goods and services exports rose 8.9 %, imports growing less at 5.7% due to weak domestic demand. Trade can increase GDP in a number of ways – for example, by improving resource allocation through specialization according to comparative advantage or by allowing economies of scale in production to be exploited.[2] Open economies also grow faster because trade fosters investment, innovation, and institutional reform.

The economic recovery in Bulgaria’s main trade partners is major factor supporting the activity of export-oriented firms. Export growth was impacted by declining international prices of goods and by the recovery of external demand for Bulgarian goods. This was after a period of financial turmoil, sharply reduced trade and investment flows, increasing prices of commodities, significantly declined aggregate external demand, and increasing global nature of macroeconomic shocks.

As concerns Bulgaria’s neighboring countries, the economic activity in most Balkan countries accelerated significantly in 2013 while in other countries the rate of decline moderated. Greece and Croatia continued to report a contraction in their economies, though at a slower pace.[3] Turkey and Romania exhibited the highest economic growth amongst the South-Eastern European countries.

According to the World Trade Organization (WTO), world merchandise exports grew by 2.5% and world GDP grew by 2.0% in 2013. Asia achieved the highest growth in merchandise exports (4.5%) followed by North America (3.0%). The highest growth in imports was recorded by the Middle East (6.0%) and Asia (4.5%).[4] China, United States and Germany were the top three merchandise traders for the last year. Amongst the EU member states (EU-28) the highest merchandise exports growth was observed in Germany, France, Italy and the United Kingdom (UK). Europe’s exports of manufactured goods achieved almost US$ 5 trillion in 2013. 

However, the Bulgarian economy traditionally comprises very low share in the world trading scene. Bulgaria is far away from the leading exporters and importers in the world trade of merchandise goods and commercial services. In 2013 Bulgarian trade represented only 0.2% of the world trade. Our country was ranked at the 63^rd place of merchandise exports in the world trading scene in the same year. According to this indicator, in 2013 Bulgaria moved 2 places up compared to 2012. During the last five years Bulgarian companies achieved average annual growth in exports of 15%. During the same period, world imports grew by 10% on average, i.e. Bulgarian firms displace other suppliers in global markets. As in the previous years, in 2013 Bulgaria was a leader in the exports of certain niche products. The further specialization of the country should be rather productive than sectoral. Bulgarian economy has neither two nor three structural economic sectors and it cannot be expected that the country would become a trade leader in a whole economic sector.

Bulgarian exports’ dynamics and structure. As in previous years, the leading export products of Bulgaria in 2013 were fuels and honey, followed by electrical and electronic products and machinery which share is constantly increasing. Especially good news is that exports of electronics over the last 5 years (2009-2013) marked the average annual growth of 15% while global imports grew by 9% over the same period. This demonstrates that Bulgaria is gaining market share in the world trade. In 2012, this merchandise group decreased by 12%, but in 2013 it rose by 25% - the reported growth compensated for the delay previous year.

Similar achievements, although not as impressive, can be found in Bulgarian exports of machines. During the last 5 years Bulgaria reported 17% average export growth rate while the average annual growth of world imports was 8%. Very strong growth was observed in Bulgarian exports of cereals – on average 31% for the last 5 years while the growth of world imports was 13%. Particularly in 2013 the cereals exports growth was the highest – 50%.

The following major product groups in Bulgarian exports are: clothing knitted, oil seeds, pharmaceutical products, iron and steel. In clothing there was some movement in 2013. If this is added to the growth of 14% in 2013 in exports of knitted products, it might be seen signs of an end to the long-lasting crisis in the textile sector in the country. Over the past 5 years traditionally well were presented the exports of oil seeds – their average growth was 17% while the growth of world imports was 14%. There was a big jump by 38% in 2013.

Bulgarian exports of pharmaceuticals also marked significant records with an average growth of 20% vs. 4% growth of global imports. However, exports of iron and steel dropped behind – in 2013 their exports decreased by 12%. Moreover, a loss of market share was observed in this export product group during the period 2009-2013.

Little better are presented the articles of iron and steel. Relatively poor in natural resources Bulgaria registered an impressive 55% growth in exports of ores, slag and ash. Indeed, most of the growth was due to the increased prices.

Well presented in the international markets in 2013 were the Bulgarian exporters of plastic products, automotive products, bicycles, furniture and tobacco. The rest merchandise export groups have also risen. Among the major export groups in 2013, a decrease of Bulgarian exports was observed in optical and medical equipment, inorganic chemicals, fertilizers and certain meat products.

Regarding Bulgaria’s position in the world markets during 2013 – 15 export merchandise groups were observed – their exports amounted over US$ 500 million. At the forefront were the following commodity groups: Lead and articles thereof, where Bulgaria was ranked at the 14^th rank among the main world exporters, followed by cereals – 15^th rank; oil seeds – 16^th rank, and arms and ammunition – 18^th rank. Also for comparison, 13 export merchandise groups were included in 2012. These export commodity groups formed just under US$ 18 billion in 2012 while in 2013 the 15^th leading commodity groups generated more than US$ 21 billion.

Table 1

Leading merchandise groups in Bulgarian exports, 2013 (over US$ 500 million)

Source: World Trade Organization.

Leading markets for Bulgarian exports. Leading markets for the Bulgarian exports of medium and heavy oil derivatives during the last years are Gibraltar, Turkey and Singapore – a total of 2/3 of our exports is for them. Ukraine, Italy and Serbia formed yet almost 16% of our markets. During 2013 Bulgarian exports to Gibraltar decreased at a very fast pace, mainly at the expense of our exports’ growth to Singapore. Bulgaria is now only seventh provider of Gibraltar, while in 2012 we were the first. For Turkey we are the fifth supplier, where the undisputed market leader there is Russia. It should be noted that in the Turkish market Bulgaria achieved with a few percent better prices than Russia.

Bulgaria exports light petroleum derivatives most to Ukraine, Turkey and Tunisia, forming almost 40% of our markets of such products. Large markets for our products are also South Africa, Lebanon, UAE, Georgia. During 2013 the fastest growing were Bulgarian exports of light oil derivatives to Lebanon and Tunisia. For Lebanon we are the third major provider of light petroleum derivatives after the leaders – Italy and France. However, we accomplish lower export prices than these two countries.

Cathode copper is exported to China 37%, Turkey 28% and Italy 22%. Bulgaria gains market positions in all these three countries. China is the largest importer of this product having 38% of all world imports. Anode copper goes only for Germany and Belgium.

Leading markets for Bulgarian wheat are Spain 23%, Romania 11%, Libya, Italy, Greece, and Syria. Best prices, however, we achieve in the UAE, Lebanon and Egypt – on average about 320-330 US$ per ton.

Bulgaria is ranked at the first place in the world in exports of sunflower seed. The largest part of our exports goes for the Netherlands, Turkey, France, Portugal and the best prices of sunflower seed we achieve in Germany and the UK. With the except of these two countries, our export prices are around US$ 530-580 per ton, which is close to the average prices of our competitors – US$ 600 per ton. Bulgaria gains market shares in almost all countries, but unfortunately we lose our shares in Turkey and Romania.

Up to 2013 among the leading export Bulgaria products the maize did not come across. Its export growth in 2013 compared to 2012 was 125% while the average growth for the last five years 2009-2013 was 42%. Bulgarian exports of maize are already ranked on the 11^th place in the world. Our markets are diversified – major partners of Bulgaria for maize are the most EU member states and the Mediterranean countries.

Bulgarian exports of medicines marked 23% average annual growth during the period 2009-2013 while the growth of world imports was 3%. Russia and Germany form 40% of our exports of medicines, followed by Romania, Ukraine, Poland, and the Netherlands. In Russia we are losing market positions, but in Germany, Poland and the Netherlands – we win.

Exports of electricity continue to be highly important for the Bulgarian economy. For the period 2009-2013, the average growth rate of 5% was – which is similar to the world imports’ average growth. Bulgarian exports of electricity are mainly to Turkey, Greece, Czech Republic, Slovenia, Macedonia, Serbia, and Romania. The best prices we achieve in Turkey and Serbia.

Exports of copper ores and ores of precious metals and concentrates thereof remained significant in 2013 – more than US$ 700 million total for both goods. Copper ores are exported to Namibia and China. Ores of precious metals are exported to Belgium, Germany, Korea and Canada – their export price is about US$ 230,000 per ton.

According to the Bulgarian data, we export cigarette mainly to the UAE and Iraq. We make a very big growth of our sales during the recent years, although in 2013 there was some shift from Iraq to the UAE. With the exception of 2013, Bulgarian exports of tobacco gradually declined. The main markets are Greece and Belgium, forming 50%, but important markets are the USA, the Netherlands and others. The achieved prices of Bulgarian exports of tobacco to Belgium, USA and Netherlands, are US$ 6,000-7,000 per ton, while for Greece – they are about ¼ lower.

As a result of several foreign investments, Bulgaria took important positions in the export market of wiring sets for vehicles. We export such products to Turkey 38%, Slovakia 14%, Romania, Spain, France, Poland, and Germany. Bulgaria has made relatively big entrance in the Romanian market, while in Spain, France, Poland and Germany our market share has fallen. This leads to a retreat of market positions worldwide.

Soda ash is a traditional Bulgarian export product which has traditional markets. We have gradually gained market positions. Our share in world exports reached 8.9% in 2013.

Also new important and leading export products are low-voltage switchboards. World imports of these products have increased on average by 18% during recent years and Bulgarian producers have benefited from this market niche. For the period 2009-2013 the average annual growth was 33%, but only for the period 2013/2012 – 58%. Exports of low-voltage switchboards are mainly to Germany, France, China and Poland.

Conclusion. The EU market is not sufficiently dynamic. In order to keep its export growth Bulgaria needs to increase its presence in the third markets. For example, our country does not use sufficiently the capabilities provided by the Turkish market which is the most dynamic market in Europe. With the accelerating integration of the Western Balkan countries towards the EU, their competition will be further increased.

At the same time our country has an urgent need of attracting sustainable foreign direct investments in industries which create high-tech export products with high-added value. Investments should be focused on further processing of resources – in fact, the resources are exported, not because of the higher prices in the external market, but because they cannot be utilized in the domestic market. In this regard, the low and favorable tax rates in Bulgaria are just one component of the total cost of doing business. More important components are: the quality and availability of labor force, the quality of public services, of local suppliers of goods and services, as well as the quality of the domestic infrastructure.

References

1. BNB, Annual Report 2013, Bulgarian National Bank, Sofia, 2014.
2. BNB, Economic Review, Vol. 4/2013, Bulgarian National Bank, Sofia, 2013.
3. Gruber, J. and Kamin, S.B., “Explaining the Global Pattern of Current Account Imbalances”, Journal of International Money and Finance, Vol. 26, 2007, pp. 500-22.
4. Hesse, H., “Export Diversification and Economic Growth”, Working Paper No. 21, Washington, DC: Commission on Growth and Development, 2008.
5. Marchetti, J. and Roy, M., Opening Markets for Trade in Services: Countries and Sectors in Bilateral and WTO Negotiations, Cambridge University Press, Cambridge, UK, 2009.
6. WTO, World Trade Organization International Trade Statistics 2014, World Trade Organization, Geneva, 2014.
7. WTO, World Trade Report 2014. Trade and development: recent trends and the role of the WTO, World Trade Organization, Geneva, 2014.