The coronavirus came to Bulgaria at a rather difficult time. Thousands of migrants are pushing to enter the EU from Turkey, and although they have little chance of crossing the tightly guarded border enclosures, the situation is of concern to both the Bulgarian population and the authorities. In Bulgaria itself, a second wave of the seasonal winter flu is under way, closing schools, suspending hospital visits and cancelling surgical operations. When the first coronavirus cases were registered in the country over the weekend, extraordinary measures were taken to locate the site of the infection and prevent panic among the population. The situation is under control, life follows its usual course with tolerable disturbances and moderate restrictions, but no one can say how things will go on.
Against this background, the business sector in the country cannot remain calm and needs to prepare for the adverse situation and possible shocks from both the domestic and foreign markets. The crisis is global and anxiety is affecting more and more countries around the world. And with many of them, Bulgaria's economic and trade ties are very strong and a number of Bulgarian enterprises depend on these economic bonds, which play an important role in the country’s GDP growth, lower unemployment and higher incomes. In the video conference with the leaders of Israel, Hungary, Romania, Italy, Austria and, Bulgarian Prime Minister Boyko Borissov said that "it is important for the world to brace itself and find a solution because the economic and financial crisis are knocking on the door." The Special Crisis Staff has promised that the measures against the spread of the coronavirus will not be such as to damage the business.
Judging by the countries that are more heavily infected with COVID-19, the Bulgarian economy is about to face lot of new challenges. Experts believe that the tourism, transport, leisure, and export-oriented industries will be hit hardest. Reservations have already been cancelled for summer vacations on the Bulgarian Black Sea coast, and if this continues, the entire national economy will be threatened because tourism accounts for about 12% of the country’s GDP. This threat is exacerbated by the already evident tendency of economic slowdowns in major EU countries, which are the country's main foreign trade partners. In practice, Bulgarian export-oriented enterprises will receive fewer orders from external contractors. For some companies, this can prove fatal.
The entertainment industry in the country cannot but suffer from the severe restriction of mass public events - sports, music, theatre, cinema, and all cultural events. From what is happening in the West European countries most affected by the coronavirus, we can judge that the restaurant and hotel industry will suffer damage as well. No one who holds good to their health will risk participating in events involving many people.
The transport sector is also at risk because of the shrinking trade and the decline in travel. Some world-renowned economic experts believe that because of the epidemic and the related fears, both demand and supply are shrinking. The most convincing confirmation of this is the dramatic slowdown in the economic growth in the country most severely affected by COVID-19- China, where export has fallen by as much as 17% since the beginning of the year. The collapse is also observed on stock exchanges around the world, which also indicates a decline in investor trust and a slowdown in economic activity.
Bulgarian business is not a lonely island and cannot be left unaffected by global processes. But it is also flexible and adaptable. Smaller enterprises, as more than 90% of Bulgarian businesses are, are more easily and quickly able to adjust to a new reality, depending on the specific circumstances, the Chairman of the Association of Industrial Capital Vasil Velev said in an interview with the BNR.
Either way, the officially expected economic growth of 3.3% will not be achieved and will fall to 3%. This will be due to the exhaustion of labour market opportunities, the volatile domestic and export consumption and the timid foreign investment. The likely decline is not small and might bring confusion in the economy and in the country as a whole.
Author Vladimir Sabev
English Rossitsa Petcova
