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Is the Bulgarian Economy Overheating?

Garabed Minassian ()

Economic Thought journal, 2008, issue 3, 3-29

Abstract: Analyzed is the condition of the Bulgarian economy for 2008 from the point of view of arising internal stains and disbalances. In the first part studied is the dynamics of particular elements of GDP and it is shown that the economic expansion in the last decade is due to import of goods and services. The GDP increase is predetermined by internal demand. A following outrunning increase on sector level marks the component which is conditionally named “correctives” which is filled by indirect taxes. In the industrial sector fastest growth has building, and in the service sector – financial mediation. Such disharmony could not carry on in a perspective because of which possible and probable is a structural change connected to a complete adjustment of the economy. Examined are the changes in inflation, employment and taxes. Outlined is a clear positive trend of inflation pressure which corresponds to a positive dynamics of real income of a person of housekeep. Material and financial resources are frozen in non-producing objects so the internal demand increases without being accompanied structurally by opposing supply. Analyzed is the financial mediation. The credit activity of the bank system is held on a unmeasured high level that does not correspond to the structural characteristics of demand. Generalized are conclusions on the accumulation of structural tension in the economy accompanied by an increase of disbalances. An attempt is made to formulate adequate macroeconomical management influences aiming not to allow serious economic and financial unprosperities as a consequence of a certain degree of overheating in the Bulgarian economy.

JEL-codes: C82 E01 E27 (search for similar items in EconPapers)
Date: 2008
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Handle: RePEc:bas:econth:y:2008:i:3:p:3-29