22.11.2018

On 21 November the European Commission released the 2019 Annual Growth Survey (AGS) and the Alert Mechanism Report (AMR). AGS states that efforts at national level should focus on delivering high-quality investment and on reforms that increase productivity growth, inclusiveness and institutional quality, continuing to ensure macro-financial stability and sound public finances. The Union level priorities are related to deepening of the Single Market, accomplishing of the Economic and Monetary Union and making progress on the principles proclaimed in the European Pillar of Social Rights.

The Alert Mechanism Report identifies 13 Member States for which IDRs are to be prepared compared to 12 in the previous year. For the first time this year this group includes Romania and Greece, which was previously excluded from MIP surveillance because it was subject to a macroeconomic adjustment programme in the context of financial assistance.

According to the updated scoreboard, Bulgaria needs to be examined further with regard to three indicators, namely the net international investment position (NIIP), nominal unit labour cost growth and real house price growth.

The dynamics of these three indicators and the accompanying changes in the complementary indicators have marked a generally positive development in 2018. The current account surplus further increased in 2017, while the negative NIIP mainly reflects FDI has improved further. Unit labour cost growth increased markedly in 2017, but the real effective exchange rate remained broadly stable and there were some gains in export market shares. High corporate debt continues to be a concern, although the debt ratio has gradually decreased over the last few years, in part due to the robust nominal GDP growth. Credit flows are picking up again, which will support higher private investment and stronger potential growth. The ratio of non-performing loans, albeit high, in particular for the corporate sector, continues decreasing. Like the developments in some other Member States, real house prices have increased fast and construction and mortgage credit have also picked up. Following positive cyclical developments, unemployment decreased further, notably for youth and long-term unemployed and activity rates improved.

Commission’s Communication on the Autumn European Semester Package.