Bulgaria can not expect that by replacing the lev with the euro this will automatically lead to higher growth for the economy. In order to reach it, additional efforts have to be made by the state. The main expected benefit may be the lower cost of doing foreign transactions, which can save the country several million euros a year.
This is what Daniel Gros, Director of CEPS, has expressed in the framework of the Annual Business and Government Meeting organized by Capital.
“My general conclusion is that the benefits of Bulgaria’s accession to the Eurozone will be great, but there will be no automatic boom of growth, and the government should work in this direction and contribute,” the expert said.
According to him, the Bulgarian economy performs much better than 20 years ago, but still not so well than expected.
“Bulgaria performs better than Greece, for example, but worse than other European countries, the root is in the specifics of trade,” said Gros.
The expert points out that our country exports more goods with low added value compared to Romania, which performs better in this direction. Gros gave an example to the automotive industry, where our northern neighbor is still ahead of us.
“3% of Bulgaria’s exports are generated by the sector at 18% for Romania, yes, the country has set a good start with the investments in the industry, but there is still something to do in this direction,” he explains.
In the words of Daniel Gros, Bulgaria will be able to take advantage of European supply chains with the adoption of the euro. “However, the state should make good use of these opportunities,” he added.
With regard to expectations of attracting more direct foreign investment after our country moves to the single European currency, the expert said he was skeptical about this. “Additional foreign investments may be attracted, but I do not think they will increase significantly,” Gross said.
On the topic of interest rates and whether they would fall significantly in Bulgaria, the expert commented: “Interest rates in the country have to fall compared to other markets in the European Union, but we must be prudent in terms of this decline.” .
“We can say that the interest rates will fall, but this must be on the backdrop of improving the economy and introducing the necessary reforms by the state,” Gros said.
According to the expert, one of the most significant positive changes for Bulgaria in adopting the euro will come from lower spending on foreign transactions.
“It is likely that these costs will fall, and this is an important argument for the Bulgarian economy.” The introduction of European payment systems can save several million euros a year, he said.
On the issue of the possible effect of the adoption of the single currency on the real estate market in Bulgaria, Specialist Market Research at Colliers International, Mark Robinson, commented that a potential drop in housing prices could be expected.
“Adopting the euro will lead to more investment in the Bulgarian property sector, but this will not be as much about interest rates as the country perceives as part of the Eurozone,” he said.
“Asia is a big investor in real estate in Eastern Europe, particularly in Poland, but that does not apply to countries like Bulgaria and Romania,” Robinson explained.
In his words, the big Asian investors rely heavily on security and reputation when they choose countries to direct their investments.
“With the introduction of the single currency in the country, these investors will come, and that will be because they will already see Bulgaria as part of the Eurozone,” added Robinson.