The global crisis and the initial response of economic agents in Bulgaria (an empirical analysis)

The empirical analysis of the initial response of the Bulgarian economic agents to the impact of the global crisis, which outburst in the fourth quarter of 2008, allows withdrawing a number of recommendations to macroeconomic policy makers. According to data households increase their propensity to save and hence, constrain consumption. Companies make efforts to preserve their financial soundness and the human capital. Consumption and investment go down thus contributing to fast but orderly current account adjustment. FDI inflow still covers close to 80% of the combined current and capital account deficit. The importance of the foreign capital inflows presupposes that the government and the central bank should be mostly concerned about sustaining the macroeconomic stability and safeguarding the investors’ confidence. Sticking to the main pillars of the macroeconomic policy implemented in the last twelve years - the currency board arrangement, the strict banking supervision and prudent fiscal policy is the best way for the economy to survive during the global economic crisis