Nearly half a billion euros less were direct investments in Bulgaria for the ten months of 2011 as compared to the corresponding period last year. This is a collapse of 40.7% and just another indicator of the Bulgarian economy’s weakness. While in 2010 businesses in our country attracted EUR1.13 billion in cash, the amount for 2011 is EUR668 million.
The consolidation process in the local business sector is continuing, according to the Central Bank. Investors and mostly foreign ones, withdraw from firms with low or negative returns that have no prospects for improvement or even survival, but continue to support strong businesses which they are involved in. This is evident from the amount of investments in equity capital, which were nearly EUR780 million. Although significantly less than in 2010 one should notice that their sum exceeds the total amount of FDI in the country for 2011. Foreign investors’ decision was quite predictable. They simply replace loans to Bulgarian subsidiaries with increase in participation in their capital. Which is a sign that they are doing what is necessary to maintain stability and keep their market positions. However, this only applies to existing and well established companies. For the creation and development of new businesses, no money is invested. And without such foreign capital to move our economy out of recession is a very difficult, if not an impossible task.
The only good news is that there is some awakening of foreign interest in the real estate market. According to statistics of the Central Bank for the first ten months of 2011 foreign citizens and companies invested in Bulgaria’s real estate sector EUR212.3 million, which is by about EUR20 million more than in the same period last year. This increase, however, is very small and could be a result from occasional transactions. In addition, amounts of around EUR20 million can not be any longer a catalyst for a single sector, let alone the whole economy.
