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Bulgaria - not just about cheap booze

If you are drowning in negative news about the state of the world economy, perhaps you should consider a permanent move to Bulgaria. Life here just gets better for the local people and in particular the growing expat market. A recent survey by the Bulgarian Economy and Energy Ministry ranks Bulgaria at the top of all EU states in terms of its low cost electricity and fuel prices. The report stated that no country within the EU could match Bulgaria’s low prices even its prices for natural gas were only surpassed by Estonia.

 

 

 

 

Sound Property Market

The real estate sector is still flourishing despite a decrease in overall yields in recent years. Property is still amongst the lowest priced in Europe and according to Levon Hampartzoumian, CEO of the country’s largest bank UniCredit Bulbank, brings satisfactory returns at low level of risk. The growth in prices were stabilizing at around 15-20% per annum compared to previous highs of 34%, Hampartzoumian maintains that this is a sign of a maturing market and that there was no risk of the Bulgarian property market collapsing.

Low Taxes

But this is not the only selling point the country has to offer “wannabe” expats; in January of this year the Bulgarian government introduced low rates of income tax all citizens is set to a flat rate of 10% making it the lowest rate in the EU and one of the lowest in the world. The reform was done in hope for higher GDP growth and greater tax collection rates. The corporate rate of income tax was also lowered to 10% in 2007, which is again one of the lowest in the world.

Low Cost of Living

The World Bank rates Bulgaria as an upper-middle-income country, which is good news given the strife the country suffered during the Nineties. With the collapse of the COMECON system and the loss of its dependence on the Russian market the standard of living in the country fell dramatically by around 40%, in fact it took until June 1004 for it to reach the levels it had attained before 1989.

Today, Bulgaria’s exports now surpass its imports and the rate of inflation is slowing down, with a 0.2% decrease in inflation as of June this year; prices here are still 46% of the EU average and compared to Romania, where the percentage is 67%, Bulgaria still offers an incredibly cheap lifestyle.

Foreign direct investment is one of the major issues in the expansion of the Bulgarian economy. The government wants to convert Bulgaria into an alluring destination for investors. Petar Dimitrov explains, “In terms of direct foreign investments as share of the GDP Bulgaria ranks second after Hungary in the European Union. In the past couple of years the amount of investments has rocketed because of the 10% corporate and income tax. We expect that at the end of the year the direct foreign investments in 2008 will match the figure in 2007.”

The rate of unemployment rate is low at 5.97% and is still falling whilst average incomes have been increasing. Information from the Economy Ministry shows that incomes increased by 10.4% in 2007 and by 10% for the first quarter of 2008. The shortage of skilled workers and the expansion of job opportunities have fuelled this growth.

Investments have increased by more than 15% since the start of 2008 mainly due to Bulgaria’s low taxation policy, cheap local labour and high ecological standards. In fact, Petar Dimitrov the Economy and Energy Minister claims that the GDP for 2008 will reach 6.2-6.5%. This is far higher than GDP in Western countries. The increase in GDP is down to several economic factors; the industrial side of the economy has by over 81% compared to the EU average in 2007 at only 12%.

Credit Crisis and the Eurozone

Even the global credit crisis has not affected the country or harmed its banking system because its business climate and economy followed a different pattern compared to Western markets. Supporting this fact is the announcement that the country’s leading banks recorded a 48.5% increase in profits during the first half of this year. The Bulgarian government plans to replace the Lev with the Euro by joining the Eurozone around 2010.