In Brief

Slump in manufacturing activity continues in July The slump in Greece’s manufacturing activity continued in July but there were signs the deterioration is easing as output and new orders contracted at a slower pace, a survey showed yesterday. The Markit Manufacturing Purchasing Managers’ Index (PMI) for Greece rose to 45.3 in July from 42.2 points in June, continuing to recover from a 13-month low of 41.8 points hit in May. Still, it remained below the 50-point mark that separates growth from contraction. Poor economic conditions and lackluster demand were the main reasons behind the contraction in new orders, which although still severe, was the mildest since January as the decline in new export business eased. The index for new orders rose to 45.1 from 39.9 in the previous month. «There have been further improvements in the levels of both the output and new order indices at the start of the third quarter, which have contributed to a further rise in the PMI,» said Markit economist Gemma Wallace. «These improvements appear to have been driven principally by a weaker fall in foreign demand. This suggests that efforts by Greek manufacturers to increase their international competitiveness are starting to take effect, although they have not yet led to a rise in new export business,» Wallace said. Austerity measures to tackle the country’s massive debt burden are expected to keep the Greek economy in recession for a second year, with gross domestic product seen contracting by as much as 4 percent, according to analysts and the country’s central bank. Last year GDP shrank 2 percent. (Reuters) Bulgarian budget deficit expands on revenue drop SOFIA (Reuters) – Bulgaria’s budget deficit expanded to 1.51 billion leva ($1.01 billion) in the first six months of the year mainly due to a drop in revenues in the recession-hit country, Finance Ministry data showed yesterday. The fiscal deficit equaled 2.2 percent of gross domestic product through June, based on the latest government GDP forecast, up from 2.0 percent in the first five months. Revenues dropped 13.6 percent from a year ago to 11.2 billion leva, as a prolonged recession hits imports and receipts from value-added tax and excise duties. «Data for the execution of revenues at the end of June show a slowdown mainly of tax revenues. The impact comes from the continuous trend of import decrease and the gradual pickup in exports,» the ministry said in a statement. The Balkan country, which has frozen public pay and pensions and cut some ministerial spending, decreased total expenditure by 0.5 percent to 12.7 billion leva in the first six months, compared with the same period a year ago. The center-right government, which took office last July, revised its 2010 budget deficit target to 4.8 percent of GDP from an initial 0.7 percent, due to the economic slowdown and after discovering hidden deficits piled up by the previous cabinet. Romanian lender BRD-Groupe Societe Generale SA, Romania’s second-biggest lender by assets, said first-half profit fell 14 percent on rising costs for bad loans. Net income dropped to 367 million lei ($113 million) from 425 million lei a year earlier, the Bucharest-based bank said yesterday in an earnings statement. The bank, majority-owned by France’s Societe Generale SA, set aside 628 million lei in the first half for provisions against bad loans, a 54 percent increase from the year-earlier period, as the worst recession in at least 20 years increased unemployment and businesses and individuals found it harder to repay loans. Romania’s economy contracted 7.1 percent last year and will probably contract again this year by as much as 1.9 percent, according to Finance Ministry estimates. (Bloomberg) T-bill sale Romania’s Finance Ministry sold 475 million lei ($146 million) of one-year treasury bills at an auction yesterday, with investor bids amounting to 1.4 billion lei, the Bucharest-based Banca Nationala a Romaniei said in an e-mailed statement yesterday. The average yield was 7 percent compared with 6.99 percent at the last similar auction of the notes on July 19. The bid-to-cover-ratio, which gauges demand by comparing the amount of bids to the value of securities sold, was 3.03. (Bloomberg)