- Urgent measures are needed to support the sectors concerned
- I expect inflation to be in double digits, says Dobri Mitrev, President of BIA, in a special interview with Standart newspaper
Main concerns of business in connection to the war
In the first place - the purely human view of the situation - people are dying. In a war, infrastructure is destroyed, supplies are destroyed for all those who receive or send goods, services and raw materials to the countries where the conflict is. Especially for the Bulgarian economy, the impact will not be good at all. I do not speak only geographically - we are close in cultural, religious, linguistic, educational relations with the warring parties. So this depresses us all. But the big concerns are about energy supplies, about the trade we have between Bulgaria and Ukraine and Bulgaria and Russia. From there we have large imports of metals, raw materials, which are currently impossible to fulfill, secondly - and in the future it is uncertain whether we will be able to get them. We are also exporters to these countries - Bulgarian companies that produce goods or provide services for this market - and Russian and Ukrainian, are also in difficulty.
Affected industries
We get a lot of raw materials - nickel, aluminum, rare metals - Russia holds the world market for them. Gold and silver too. Mechanical engineering, metallurgy, chemical, processing industries will be affected. From Ukraine and Russia we receive many spare parts for agricultural and construction machinery. We have no alternative at the moment. We export household appliances to this market, such as water heaters. Our industry will be severely affected. And especially tourism - one of the most affected sectors, because a large number of tourists come from both Russia and Ukraine. Flights have been canceled, it is impossible to travel. The Black Sea is an uncertain zone. The consequences for the economy will be dramatic if this conflict does not end quickly and if the state does not take adequate measures.
What should the measures be?
In terms of food and nutrition, we do not have such a threat, because we are a producer of wheat. But everything else will be affected. What the state can do very quickly are emergency plans to look for alternatives, such as metals - to get them from other countries. For gas, there are some hopes that the gas connection with Greece may happen and we will have alternative supplies for liquefied gas. But business can't do that - it's the state's job.
Possible temporary military budget
If there are drastic deviations from the parameters set in the recently adopted budget, the priorities must be seriously regrouped. The big risk is inflation, which can occur when there is a shortage of raw materials and energy. In such cases, prices jump dramatically.
Possibilities for hyperinflation
At this stage, hardly, especially if there is no speculation on the part of traders and resellers. But it is possible to see double-digit inflation numbers.
Regarding sanctions that restrict payments by excluding Russian banks from SWIFT, how does business see an alternative
For natural gas, in practice, we prepay the quantities we will buy. And if we cannot pay for it, the supplier has the right to terminate the deliveries. This must be decided at the state level. Issues for barter can be discussed, for suppliers from elsewhere - what will be their value, I dare not think.
Are there companies in very difficult situation taking drastic measures, e.g. closing
We have not identified among the members of BIA companies that are completely dependent on the markets of Ukraine or Russia at the moment. But those who do business with Ukraine and Russia need to look for places to sell their products - in countries outside the region, which will require both time and negotiations, and prices may not be the same. There will be affected, but currently the most affected is tourism.
Necessary measures to support the most affected sectors
Of course there must be such. This must be a state policy. There are many people employed in tourism. In addition, it will involve other sectors - food, services, aviation. A very serious analysis must be made for all those who will be affected by the sanctions and the state must very quickly look for ways to save them.
