Industrial production falls for third consecutive month in August

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Source: NSI

Comment

New data from the National Statistical Institute (NSI) shows that industrial production fell for the third consecutive month in August by 1.33% year-on-year, compared to 1.03% in July. All major sub-sectors – mining, manufacturing and energy – reported a decline in August. More importantly, however, June-August this year is the first three-month period since 2013 during which industrial production has been in continuous decline.

These data are a clear indication that Bulgaria's economy is now certainly out of the "up" period of the business cycle and is entering the "down" period, which generally ends in a recession. Given that industrial production is falling in both July and August, this will certainly have a strongly negative effect on GDP data. GDP growth will certainly slow down and, depending on how retail sales perform, growth compared to the second quarter may reach levels very close to zero. In any case, given the latest data, the contribution of industry to GDP in the 3rd quarter of 2019 is unlikely to be positive.

We should not panic, the decline in industry will not put us in a technical recession (a decline in GDP in the 3rd quarter compared to the 2nd of this year), but it is a clear signal that one is approaching. In fact, as we have been commenting for quite some time now – there have been signals for a long time, mainly from other countries within the European Union.

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