Bulgaria's economy shrank by 3.5 % year-on-year /more than last year/ in the first quarter of 2009, National Statistical Institute said on June 10. The quarterly data showed that Bulgaria was in a recession, its GDP contracted by 1.6 % in the fourth quarter of last year and 5 % in the first quarter of 2009.

Bulgaria's Government targeted 4.7 % economic growth in its 2009 budget, a figure criticised as overly optimistic both at home and abroad. Cabinet ministers have said in recent months that the more conservative 2.1 % estimate that was used to draft budget spending was more likely.

The central bank, however, recently reviewed its forecast to say that it expected the economy to shrink by 2%.

In real terms, Bulgaria's gross domestic product (GDP) in the first quarter of the year was 13.96 billion leva or 7.14 billion euro. Per capita GDP was 1 831.3 leva or 936.4 euro. The industrial sector was the main driver of the decline, contracting by 12.4 % year-on-year under the pressure of the economic slowdown, Bulgaria's decreasing exports to the European Union and the gas delivery problems in January during the Russia-Ukraine price dispute.
Agriculture shrank by 4.8 %, while the 2.5 % increase in the services sector prevented a bigger overall slide.

Bulgaria's public finances are in for a major collapse, threatening to widen the consolidated budget deficit to 2-3 billion leva unless the Government takes decisive action. The cash shortfall is worst in national social security contributions, where different calculations point to an annual deficit of between 250 million and  500 million leva if pensions are not increased on July 1.