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Electronics Production | April 16, 2009

High inflation cause of concern for Bulgarian EMS industry

According to Frost & Sullivan's new report "Bulgarian Electronics Manufacturing Markets" the high inflation has been a cause of concern, especially amidst the economic slowdown, which affected Bulgaria in the second half of 2008. Nevertheless, contract manufacturers in Bulgaria can look forward to mixed trends in 2009 with more market opportunities projected to emerge in the coming years.
"The global economic slowdown, which spread to emerging markets in central and eastern Europe (CEE) in 2008 has had a considerable impact on FDI flowing into the electronics manufacturing segment in Bulgaria," observes the analyst of this research. "Nonetheless, with the government introducing aggressive policies to woo investors to Bulgaria, the country is set to attract appreciable FDI in electronics manufacturing in the coming years." The Bulgarian government has decided to lower investment thresholds and offer more incentives to electronics manufacturers investing in regions experiencing high unemployment. These economic reforms in the wake of the economic slowdown have been an attempt to lower the impact of this crisis on the Bulgarian economy. Hence, Bulgaria is set to emerge as one of the largest recipients of FDI in the CEE region in the coming years.

In 2008, rising inflation rates, as well as the advent of the economic slowdown, restrained the expansion of the electronics manufacturing market in the country. This trend is expected to persist in 2009 as well. Declining demand in key end-user segments has also been a key restraint for market growth. "Curtailed investments due to the economic slowdown as well as mounting operating expenses will impact the prospects of the Bulgarian electronics manufacturing market in 2009," cautions the analyst. "In addition, declining demand from end users will be a major restraint on growth potential."

Proximity to Romania and other emerging markets in eastern Europe are positioning Bulgaria as a key electronics manufacturing hub for the future. As electronics manufacturers increasingly look to capitalise on markets with limited competition, Bulgaria is emerging as an attractive destination for electronics manufacturing and services in southeast Europe. "Bulgaria offers the advantage of strategic proximity to Romania and a low competitive scenario," remarks the analyst. "Accordingly, it is increasingly being preferred by many electronics assemblers who are evaluating the southeast European market."

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