What's behind Bulgaria's FDI Data?
"Statistics," Thomas Carlyle, the Scottish writer and philosopher remarked, "are the greatest liars of them all."
Carlyle was writing in the first half of the 19th century. But his words definitely carry weight for today's Bulgaria, I thought as I munched on the latest spade of good economic news, distributed by the statistics office and the central bank:
"Bulgaria registered an increase in its foreign direct investment in January-May 2012 year-on-year.
Foreign direct investment for January - May 2012 increased by EUR 473.8 M (1.2% of GDP), compared to an increase of EUR 72.2 million (0.2% of GDP) for January – May 2011.
By country, the largest direct investments in Bulgaria for the period January - May 2012 were those of the Netherlands (EUR 394.7 M) and Switzerland (EUR 105.5 M)."
Is it because more foreign companies understood Bulgaria is the right place to start a new business or move part of their production? Is it because they saw in Bulgaria's much-lauded mix of good human resources, will to improve the business environment and a great industrial potential, the ingredients of their own success story?
No, unfortunately. There are three main reasons for that.
1. The odds are that this most welcomed money by foreign investors are mostly Russian and Bulgarian money, flowing through companies registered in the Netherlands and Switzerland.
2. The statistics do not make clear whether the investments created new jobs and brought added value or just were made in sectors, which are in practice funded by Bulgarian taxpayers.
3. It is clear even from the official data that foreign investors continue to take out abroad more money than they bring into the country.
What we all know is that: the complex world economic situation, the weak domestic demand, the collapse of the real estate market and the credit crunch, along with some signals by local policy makers forced foreign investors in the property and financial sectors to rethink their plans for the Bulgarian market, disinvest heavily or in some cases leave the country outright.
The good news is that investments in the manufacturing and processing industry have remained unchanged over the last few years and have even marked an increase after 2009.
But this does not change the fact that statistics are "the greatest liars of them all".
Though that's no news, here is a piece of advice for the people at Bulgaria's statistics office: you'd better cool down your enthusiastic mood.
Otherwise you risk appearing plain ridiculous and for no reason at that – the general elections are a year away, after all, not next week!