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Bulgaria is not Greece either
Spotting the next Greece seems to have turned into a new sport among journalists. Countries experiencing economic problems are instantly likened to Greece these days even though the fundamentals may differ substantially.
We argued here last week that the Hungarian economic situation is challenging but not necessarily similar to Greece’s. The same is true for Bulgaria. The EU commission suspects that the budget numbers produced by the Bulgarian authorities are incorrect and should be revised upwards. This is obviously bad news and there may be some really serious issues behind the revision. But that does not make Bulgaria into Greece. The latter suffers from a structural debt problem – with sovereign debt expected to reach 150% in a few years – whereas the former has one of the smallest public debt figures in Europe at less than 15% of GDP. These differences do matter when analyzing the severity of the problem and how long it may take to correct the problem.
There is one common denominator in Greece, Hungary and Bulgaria and that is that the authorities knowingly or unknowingly have presented incorrect economic statistics. That points to incompetence or poor judgment or both. It is not necessarily the present governments fault but that does not really comfort financial markets. So, it is probably a good idea that the EU Commission will start to scrutinize the numbers more closely. That should hopefully work as a deterrent so that we can avoid these things in the future.
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A long-term perspective and local presence are key to East Capital’s investment philosophy. Making 1,200 company visits and meetings every year in the region teaches us more about the markets than all indices ever could. This blog aims to share our experience of investing in Eastern Europe & China in an informative and insightful manner.
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Our bloggers
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Founding partner and Chief Representative, Shanghai office. Karine blogs about East Capital, its investment products and gives direct reports from Shanghai.
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As East Capital's Chief Economist Marcus will focus on macro-economic issues, market events, research and political issues affecting the region.
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As Head of Communications Vesna will focus on East Capital's business as well as the latest media topics.
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Kristina, Macro Economist Asia, will share her experience and report trends and issues within politics and economics affecting China.
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