Economists from BAS: The consequences of the crisis in Bulgaria are expected to be smaller or similar to those in the EU

Scientists recommend conducting a "sensible" economic policy aimed at stimulating those industries that are characterized by the use of relatively higher technologies

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Economists from BAS: The consequences of the crisis in Bulgaria are expected to be smaller or similar to those in the EU

Prof. Dr. Stoyan Totev, Institute for Economic Research at the BAS

Photo: Mega Communication

The structure of the Bulgarian economy allows it to be less negatively affected by economic crises in general. This suggests that the negative economic consequences caused by the military conflict in Ukraine will be smaller or at least similar to those that will be suffered by the rest of the EU countries. The conclusion was made by Prof. Dr. Stoyan Totev in a plenary report at an international scientific conference on the topic: "Economic development and policies: realities and perspectives. Challenges and risks in the conditions of overlapping crises". It is organized by the Institute for Economic Research (IRI) at the Bulgarian Academy of Sciences (BAS). It is attended by teachers, scientists and independent experts from Bulgaria, France, Romania and the Czech Republic, Mega Communication reported.

The expectations for Bulgaria are that there will be no entire sectors that will be seriously affected by the crisis, and that there will be no significant changes in the country's comparative advantages. The problem may be specific industries that in their development so far have imported raw materials and products from Ukraine and Russia, stressed the economist from the Institute of Technical Studies at the BAS.

In support of his thesis, Prof. Totev cites data from the World Bank, according to which the comparative advantages of the Bulgarian economy are in the export of products in the field of food, textile, sewing and metalworking industries, as well as in the export of non-metallic mineral products. The comparative advantages of products in the chemical and furniture industries and in the production of plastic and rubber products are also close to unity, he said.

With the proviso that in case of a continued stagnation in Europe as a result of the current crisis, certain industries and productions may be affected, including to change and comparative advantages, Prof. Totev emphasized that due to the low elasticity of substitution of food products, the agrarian sector should be affected to the smallest extent, in contrast to the development of high-tech industries. To the extent that they do not have a large participation in the processing industry in our country, the industry will probably be "affected" by the crisis to a lesser extent compared to the average indicators for the EU countries, the economist argued.

Services are expected to be most affected by the crisis conditions, and this will also depend on the duration of the crisis itself. It is known that this sector recovers very quickly when the economic situation normalizes. A disturbing factor for Bulgaria could be the longer duration of the crisis, especially in tourism and transport.

The other big problem facing the Bulgarian economy is that, in addition to being the least competitive compared to EU countries, it is generally too energy-intensive. Therefore, in the short term, the war in Ukraine is expected to have a negative impact on industries that use natural gas, and more specifically on the realization of their production. To the extent that other EU countries will experience similar difficulties, Bulgaria cannot be expected to have serious problems at least on the European market, explained Prof. Totev.

In this sense, the economist's recommendation is to conduct a "reasonable" economic policy aimed at stimulating those industries that are characterized by the use of relatively higher technologies, but there is also a prerequisite for this based on the presence of their comparative advantages. Another possibility is the search for development in the higher segments of the production chain, which allows to achieve relatively higher labor productivity in low-tech industries - in recent years, enterprises in Bulgaria have already improved their positions in this direction, according to Prof. Totev.

The participants in the conference discussed topics such as: the adaptability of economic policies during a crisis, the efficiency of the used resources, the challenges facing the single market, changes in international specialization and competition in the EU, etc. Prof. Laurent Estachy from the French business school KEDGE also took a special part in the scientific forum, who spoke about trends in world inflation and geostrategic hypotheses in the era of the invasion of Ukraine.

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