We are catching up with the EU, but slowly
Catching up with the average European standard of living, labor productivity and level of economic development has been the main goal of Bulgaria for more than three decades. However, different regions of the country are moving towards this goal at different rates. These differences are clearly seen in the newly published Eurostat data on the size of GDP per capita in European regions.
In order to assess the convergence to the average European levels, we take the difference/margin of the different districts and regions for planning from the average EU level. An important distinction in this year’s data is that Brexit is already a fact – “EU average” now applies to the 27 member countries without the United Kingdom. From a practical standpoint this means that the poorer EU members “get richer” compared to the EU average, because the United Kingdom was among the richer states and net sponsors of the European budget, hence its leave pushes down the average figures.
In the comparison of the different planning regions, the southwestern region is the clear leader, as it contains the capital. For the nine years from 2010 onwards, the region has gotten close to the EU-27 average figures with 12 points, to 47% of the European average GDP per capita. In the other three remaining regions – northern central, northeastern, southern central – the convergence rate is the same – by 6 points, in the northwest – by 5. This implies that, compared to the EU average, the regions are developing with a relatively even speed. Interesting is the trajectory of the southeastern region, which in different parts of the decade remains second-place, but has been losing speed in the last two years. It is important to mention that regions outside the southwestern are grouped very close to each other, between 17 and 22% form the average EU-27 level; in other words the different developmental rates of the regions might look big from the point of view of Bulgaria itself, but in comparison to the entire EU the differences between them remain miniscule.
The presented data up to here concern the nominal GDP; it describes the “raw” distribution of the GDP per EU regions, and has been chosen for this analysis due to the data accessibility on a local level, presented a bit further on. The more standard comparison uses the so-called purchasing power standard, which incorporates he price differences of products and services in different countries.
In terms of purchasing power standard, the planning regions have demonstrated similar dynamics, but different distances from the average European figures; in 2019 the southwest region already covers 89% of the average EU-27 figures, the northwest – only 32%.
On a local level, regional differences in the catching-up towards the average European levels of economic development are more distinct. Without the rest of the southwestern region, Sofia reaches 57% of the average for the EU-27 level, in Stara Zagora, mostly due to its energy complex – 29%. The leading economic centers stand out, mostly Varna and Burgas. The differences in growth are not surprising – the energy centers most rapidly melt down the difference with the average GDP per capita, followed by the capital driven mostly by the digital export-oriented services and the strong industrial districts – Plovdiv, Gabrovo, Ruse, Varna. What is worrying, however, is that 5 districts – Silistra, Sliven, Stara Zagora, Pernik and Dobrich – have gotten closer to the average EU level of GDP per capita with only 2 points in the span of eight years.
It is important to note, however, that the current catching-up rates – in a period, which we cannot define any differently than as a strong economic uptake with record high indicators of the labor-market – in no way are sufficient for catching-up to the average European levels in the near future. Despite the fast growth of the digital sector and the restructuring of production with higher added value in a series of industries, the convergence towards the average EU-27 is to a large extent a game of catching-up growth; maintaining the relationship is not enough. This, of course, does not mean that the nominal economic development and wellbeing of the population has not improved; on the contrary.
The presented data do in no way account for the 2020 economic crisis and the way in which it affected the Bulgarian regions and the EU as a whole. It is very likely that in 2020 we are to report smaller differences between the leading and weaker economic districts of Bulgaria, as the main economic centers experiences harder hits, but also a mute “convergence” to the average for the EU-27 due to the more serious damage, inflicted on the big western European economies. These effects are however going to even out relatively quickly in the process of normalization after the crisis; in the end, convergence is a lengthy process, which takes many decades to complete.
