Local Investment – Opposing Trends Throughout the Crisis

The impact of the 2020 economic crisis on the investment activity of non-financial enterprises is ambiguous, given that in different parts of the country (sometimes even within a single economic center) opposing trends can be observed. In the first year of the pandemic firms in many municipalities (155 in total) saw a decline in expenses for acquiring tangible fixed assets, in comparison to 2019. Despite this, investment in such assets rose on a national level, which was driven mainly by the 41% yearly rise in Sofia. This can be attributed to the significant boom of residential building construction in the capital, where housing demand has been strong ever since the revoking of the strictest Covid-19 measures. 

The highest concentration of municipalities, where expenses for purchasing tangible fixed assets fell, is around the cities Gabrovo and Veliko Tarnovo, as well as in the region around Sliven and Yambol. Interestingly, a decline in such expenses was not observed in the tourist regions of the country but rather in places where manufacturing is dominant. This probably reflects the reaction of firms to the economic uncertainty of 2020. In nominal terms, investment in tangible fixed assets was the highest in Sofia (2,9 billion leva more than in 2019). The runner-up was Botevgrad with 112 million leva. Plovdiv and Varna are the cities that marked the most significant decline ( -192 million leva and -110 million leva, respectively). In both municipalities commerce, transport and tourism were the most affected sectors. 

Map 1: Change in investment in tangible fixed assets of non-financial firms between 2019 and 2020 in %, source – NSI

 

Interactive version: https://265obshtini.bg/map/209

In 2020 total expenses for acquiring long-term tangible assets were the highest in Devnya (13,4 thousand leva per capita) and Radnevo (10,9 thousand leva per capita). Some of the biggest Bulgarian companies are based there and those were probably their investments, planned before the downturn. In 2020 investment activity remained high in the capital city (7,8 thousand leva per capita) but also in places in its broad industrial periphery like Elin Pelin (6,8 thousand leva per capita), Bozhurishte (6,6 thousand leva per capita), and Botevgrad (5,4 thousand leva per capita). In most of the country, though, purchases of tangible fixed assets remained low. For example, in 208 municipalities they amounted to less than 2000 leva per capita and in 133 – below 1000. In absolute terms, those expenses were the highest in Sofia (10,3 billion leva), Plovdiv (1,3 billion leva), and Varna (698 million leva). Twenty municipalities in total enjoyed investments in tangible fixed assets worth more than 100 million leva. 

Map 2: Per Capita expenses for acquiring long-term tangible assets of non-financial enterprises, 2020, BGN, source – NSI

 

Interactive version: https://265obshtini.bg/map/208 


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