The European Bank for Reconstruction and Development (EBRD) has become another institution that has lowered its expectations for the economy of Bulgaria and the region due to the war in Ukraine. It is betting on real GDP growth of 2.5% this year instead of 2.8%, as was its March forecast. The revision for the next year is sharper - by 0.6 points down to 3%. The picture is similar in the other countries of Southeast Europe, for which the forecasts have been reduced by 0.2 and 0.7 points on average to 2.6% and 3.2% respectively for this and next year. This is the first macroeconomic forecast of a large institution since Russia cut off gas supplies to Bulgaria and Poland. The lower growth is due to the effects of the war in Ukraine and rising food and fuel prices. The EBRD's expectations for the Bulgarian economy are close to those of the Ministry of Finance and the World Bank in April, which are betting on a slightly higher growth of 2.6%, and completely coincide with the forecast of KBC Group. With rapid normalization of inflation and stable investments, it is possible that Bulgaria will achieve higher growth. The bank's analysts report that the Bulgarian economy will slow after last year's growth of 4.2%, which came mainly from final consumption and despite the decline in investment. 

In March 2022, industrial production in Bulgaria increased by 19% compared to the third month of 2021. This is the most serious growth since April 2021 and since then the trend has remained positive. This is clear from data from the National Statistical Institute (NSI). Compared to February 2022, industrial production increased in March by 5%. In the second month of the year the increase on a monthly basis was only 0.3%. According to the NSI, the increase in the index on an annual basis comes from the growth of production and distribution of electricity and heat and gas - by 51.1%, in mining and quarrying - by 19.4%, and in manufacturing - by 13.3%. Huge growth in the manufacturing industry compared to the corresponding month of the previous year was observed in the production, not elsewhere classified - by 95.7%, the production of beverages - by 44.7%, the production of wood and wood products, without furniture - by 36, 7%, the production of computer and communication equipment, electronic and optical products - by 24%, the production of chemical products - by 23.5%. The largest decrease was reported in the manufacture of medicines and products - by 9.3%, the manufacture of vehicles without cars - by 6.7%. 

Large producers of textiles and clothing from Western Europe export their production from Ukraine to Bulgaria, but the expectations of the companies are to pay the same price as in Ukraine. These are relatively high-end brands that have invested directly in their own production in Ukraine and these productions are currently closed. This was said in an interview by the President of the Bulgarian Association of Apparel and Textile Producers and Exporters (BAATPE), Radina Bankova. However, the increased volume of orders from Western companies to Bulgarian companies unlocks the old problem in the country related to labor shortages. The chairman of BAATPE reminded that in recent years, large Western brands have invested in plants in Ukraine, Armenia, Moldova and Turkey, after this process ended in the Balkans. With the closure of many companies in Ukraine and the withdrawal of large Western investors from that country, they turned to the Balkans and mainly to Bulgaria, which is a traditional producer of textiles and clothing. However, the great conflict of interest is related to the price, because they are planned for production in Ukraine, and we cannot work at these prices, because they cannot cover our current costs, said the chairman of BAATPE.

Bulgaria will disburse an additional grant of BGN 96.2 million to secure liquidity and provide funds for investment and growth to small and medium-sized enterprises (SMEs). The funding will allow the seven local banks acting as financial intermediaries to offer new loans without collateral to Bulgarian businesses, thus enabling them to secure sufficient working capital as well as funds for new investments. The latest credit resource will bring to BGN 240 million the total size of the financial instrument, which will be administered by the ministry's fund manager, the Fund of Funds. The grant will be channelled through the operational programme Recovery under the European Commisssion's Recovery Assistance for Cohesion and the Territories of Europe mechanism for additional cohesion funding, which extends COVID-19 recovery measures. The participating lenders are Tokuda Bank, First Investment Bank, Raiffeisenbank Bulgaria, Postbank, UBB, DSK Bank and UniCredit Bulbank. The total amount of business loans to be provided to Bulgarian SMEs under the operational programme Recovery since its inception in summer 2021 is expected to reach BGN 700 million.

Bulgaria will request an exemption from levying excise duties on electricity and natural gas from the European Commission, as part of a raft of measures it will begin putting in place this week to tackle the economic impact of high fuel prices. Under current EU rules, member states may apply for full or partial exemptions or reduced rates of taxation in relation to power from renewable energy sources, energy products and electricity used for the transport of goods and passengers by rail, metro, tram or trolleybus as well as electricity, natural gas, coal and solid fuels for household use. EU countries may also be able to get an exemption from excise on natural gas where the share of gas in the end energy consumption is below 15%. The announcement came after a meeting of cabinet ministers with representatives of Bulgarian transport companies, which have threatened nationwide protests demanding subsidies and the halving of excise duties on motor fuels.

The Bulgarian Development Bank reported a net profit of BGN 19.5 million for the first quarter of the year, the credit institution announced. As a result of the new stable management, the bank increases its efficiency and notes growth in its direct lending activity. In the first three months of this year alone, BDB granted 81 new loans and leases totaling BGN 17.7 million to small and medium-sized enterprises. The loans are for new credit products in support of a number of sectors, including hotels and restaurants, investments in green energy, as well as new working capital programs without collateral. The indirect support of BDB through the commercial banks in the country continues. For the first quarter of the Recovery Program, loans of over BGN 80 million were granted to nearly 300 micro, small and medium-sized enterprises. The financial results show an increase in the bank's operating income, which is BGN 27.8 million compared to BGN 3.1 million for the same period in 2021.

The cosmetics manufacturer Lavena reports an increase in revenues and profits in the first quarter of the year compared to the first three months of 2021. The company's revenues from its activities for the period January-March increased to BGN 4.348 million from BGN 3.997 million for the same period in 2021, or by almost 9% on an annual basis. The total revenues, which include BGN 96,000 in government funding (under compensation programs), are BGN 4.445 million compared to BGN 4.033 million a year earlier. The company's expenses increased at a slower pace - up to BGN 4.065 million from BGN 3.899 million, or by 4.3%. The costs for materials of the company, which include raw materials and energy costs, remain stable at the level of BGN 2.5 million. Expenditure on external services is declining, while wages and insurance are rising. Lavena reported a profit of BGN 342,000 at the end of March compared to BGN 121,000 at the end of March 2021, which is almost three times more. The income per share is positive in the amount of BGN 0.034 at the end of March compared to BGN 0.012 at the end of March 2021. On June 14 the regular general annual meeting of the shareholders of Lavena will be held, at which the distribution of BGN 0.02 gross dividend per share (BGN 1.6 million in total) will be voted.

Germany is quietly preparing for a sudden halt to gas supplies from Russia with a package of emergency measures, which could include taking control of critical companies. The training, led by the Ministry of Economic Affairs, shows increased readiness for gas supplies, which feed Europe's largest economy and is critical for steel, plastic and car production. Russian gas accounted for about 55 percent of German imports last year, and Berlin has come under pressure to withdraw from business relations that critics say are helping to fund Russia's war in Ukraine. Germany has said it wants to give up Russian supplies, but expects to remain largely dependent on Moscow for gas until mid-2024.

US government officials asked Brazil's state oil company Petrobras if it could increase crude oil production in March. The goal of the United States is to compensate for the lack of Russian oil, which is under embargo because of Vladimir Putin's war in Ukraine. Reuters sources familiar with the matter said negotiators had returned empty-handed. The management of Petroleo Brasileiro SA stated that production levels are a function of business strategy rather than diplomacy, and that a significant short-term increase in yield would not be logistically possible. "We are doing everything we can with our allies and partners to mitigate the economic effects of Russia's actions on other economies, such as Brazil," a spokesman for the US State Department told Reuters. "We are working with energy companies to increase their supply capacity, especially by increasing prices." The spokesman did not give details and did not comment specifically on the March meeting with representatives of Petrobras.

Tesla has stopped most of its production at its Shanghai plant due to problems with the supply of parts for electric cars, world media reported. The company is facing increasing difficulties in developing its business normally, due to Beijing's policy of zero Covid and ongoing lockouts in the country. Elon Musk's plant in Shanghai plans to produce less than 200 vehicles a day, a huge drop from the traditional 1,200 units produced in one day. The blow comes after the factory was completely closed for 22 days due to coronavirus policy. Problems in the global supply chain further complicate the situation for China's second-largest electric car maker, after BYD. Their total sales in China fell by 48% in April, due to restrictions that led to closed factories and rising costs. Tesla's Shanghai plant produces the Model 3 sedan and Model Y crossover for both the Chinese market and exports.