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Bulgarians Getting Wealthier

A recent report by Industry Watch shows that Bulgarians are getting wealthier. Their wealth has now reached 90 thousand million euros, with financial wealth at 16 thousand million and property wealth 73 thousand million. The country has also topped the worldwide housing report for house price rises.

Regarding their financial wealth, this rose by 23% in the last year. Of this, liabilities to banks and loan companies amounts to only 5 billion euros.

 

The largest factor contributing to the wealth growth is the increasing sales of property and the rise in house prices, together with inflow of cash from abroad. Wealth is increasing faster than inflation and the share of bank deposits has also expanded as household incomes grow, according to independent agency Industry Watch.

“The total value of housing in Bulgarian regional centers is close to 73 thousand million euro. For two years housing wealth grew by 72%”, explains Krasen Yotov from Industry Watch. “This is due to the increase in the housing fund, coupled with soaring prices. One-third of the Bulgarians’ housing wealth is in Sofia, and another third – in the country’s five largest provincial cities. In our estimates the financial and housing wealth of households totals some 90 thousand million euro.”

Whilst the uptake in mortgages is on the up, their share in the total credit of households is small. In the Euro Zone, this share normally represents 70% but in Bulgaria it is only 40%.

Economic analysts believe that the Bulgarians' wealth will continue its high growth rate, with bank deposits increasing.

Industry Watch endeavoured to dig out some hidden figures from the official stats. One of these is some of the key cash flows in the economy which are not accounted for. One of these is in the construction sector. This employs ar'ound 200,000 people and declare an average salary of 200 euros. In reality, however, their monthly income exceeds 500 euros. In the tourism sector, employing 100,000 people with an average salary of 150 euros, the salaries are again in reality two or three times higher. This means that in these two sectors along, over one thousand million euros remain in the grey economy.

Another area of cash flow is that of transfers from Bulgarians working abroad back to the country. There are no firm statistics, but the Bulgarian National Bank believes that these transfers are worth 1.2 thousand million euros - but of course, not all this money arrives by bank transfers, so there is a hidden flow of cash going into savings or is being spent.

“These major cash flows alone can generate an annual resource of some three thousand million euro entering people’s incomes or the Bulgarian economy, and unaccounted for by official statistics”, says Georgi Angelov, economist from Open Society.

Lachezar Bogdanov from Industry Watch sums up the outdated methods of official statistics, saying, “The mere fact that Bulgarians have saved 16 thousand million euros would seem fairly strange, if we assume that their incomes amount to an average of 250 euro a month. It is obvious that there are ways for Bulgarians to work, make cash and generate higher incomes and thus add to their wealth and consumer and saving powers, with all this in the dark for national statistics”.