Bulgaria's business climate has deteriorated in March, the National Statistical Institute (NSI) said on Monday, as the country entered its third week operating in a state of emergency over the coronavirus crisis that has severely impacted businesses.
The overall business sentiment indicator dropped by 3.7 percentage points month-on-month in March, due to the worsened assessments of the business climate in manufacturing, retail trade and services sectors, the NSI said in a monthly business climate survey, in which managers of 4,200 enterprises were interviewed in the period March 2-March 18.
Last week, the Bulgarian machine-building industry chamber (BBCMB) said that local units of German vehicle access systems manufacturer WITTE Automotive and French auto parts manufacturer Montupet will suspend operations due to the novel coronavirus disease (COVID-19) pandemic.
Bulgaria's construction sector has lost up to 100 million levs ($56 million/51 million euro) since March 13 when the government introduced a state of emergency due to the coronavirus outbreak, Iliyan Terziev, head of the Bulgarian Construction Chamber, said last week, whereas the Bulgarian Chamber of Commerce and Industry said that some 12% of Bulgarian companies have suspended operations since the state of emergency took effect.
The NSI said in its survey that business climate has deteriorated most in the retail trade sector, by 6.6 pp, as a result of the more unfavorable retailers’ assessments and expectations about the business situation of the enterprises,
Retailers' forecasts regarding the volume of sales and orders placed with suppliers over the next three months are more reserved. The competition in the branch remains the main problem for business development in the sector, followed by uncertain economic environment and insufficient demand.
The indicator in the manufacturing sector dropped by 5.2 pp month-on-month. According to entrepreneurs, there is a decrease of the volume of orders, which is also accompanied by more pessimistic expectations about activity and personnel over the next three months, NSI said. The unfavorable influence of the factor ‘uncertain economic environment’ increased last month, pushing into second place the factor 'difficulties connected to the shortage of labour".
The indicator in the services sector decreased by 3.1 pp month-on-month as demand is seen by managers as slightly reduced. However, expectations for the next three months are favorable. The business climate improved only in construction in March, by 1.4 pp. According to construction entrepreneurs, there has been some increase in the new orders inflow over the past month, while expectations about the pace of construction activity over the next three months are more optimistic.
Prime Minister Boyko Borissov said earlier this month that the government will introduce a package of financial measures worth 4.5 billion levs ($2.5 billion/2.3 billion euro) to support businesses under strain from the COVID-19 and preserve jobs.