Wednesday, 18 January 2012

The Future of Construction in Bulgaria - EU Funds and FDI Fuel Growth

Bulgaria's integration into the EU in 2007 established suitable conditions for construction industry growth as investments for development, especially in the infrastructure market, were made.

London, January 18, 2012 – Infrastructure construction was the largest market in 2010, representing a share of 36.9%. Moreover the market was the fastest growing over the review period, with a CAGR of 18.84%. This was followed by institutional construction with a CAGR of 15.10% (reference figure 1 below).

Bulgaria, situated in Southeast Europe, is an industrialized free market and upper income country as specified by the World Bank. In 2010, the services sector accounted for 64.6% of the county’s GDP, followed by industries, comprising 30.1% and agriculture, accounting for 5.3%. Bulgaria recorded an average annual growth rate of 6% during 2004–2008 following economic reforms since the 1990s, which saw the country, begin its transition from a socialist to a capitalist economy. Growth was supported by rising exports, growing foreign direct investment (FDI) and expanding domestic consumption.

The global economic crisis, which originated in the US in 2008, led to a contraction of 4.9% in the country’s GDP in 2009. However, the exports market recovered marginally in 2010 with GDP recording a growth of 0.2%. In 2007, Bulgaria joined the European Union (EU), which is expected to stimulate further industry growth and activity due to an influx of funds from the European Commission, alongside investments from Western European companies owing to the growth potential of the country’s various construction markets.

Bulgaria has established itself as an attractive outsourcing and off shoring destination. Bulgaria’s accession to the EU in 2007 further stimulated the expanding outsourcing segment, which possesses advantages over Asia due to highly skilled manpower, cultural proximity and excellent language training.

Within the manufacturing category, most investments were made in the automobile industry. The construction of a factory for automotive parts near Rakovski and a car factory initiated by the Chinese Great Wall Motor Company in Lovech were the most significant investments in the manufacturing plant category in 2009.

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