Bulgarians spend more on furniture and renovation (4.5% compared to 3.9%) while Romanians pay more for clothing and foot ware (5.4% versus 3.4%).
Health services attract 4.8% of Bulgarians’ income, and only 3.9% of the Romanians’. However, Romanians pay more for telecommunication services (5.3% of their monthly income), than Bulgarians (just 4.9%).
Expenses allocated for entertainment are relatively similar: 3.4% in Romania and 3.8% in Bulgaria. The average income of a Bulgarian household amounts to €314 while in Romania it exceeds €420. Only 50% of the revenues come from salaries in both countries, and the remainder comes from sources such as own companies, property sales, and bank loans. The average monthly expenses of a Bulgarian household reach €302 while in Romania the exceed €380.
Purchasing power
According to Eurostat, the equivalent of minimum salary in terms of purchasing power is €204 in Romania, compared to €216 in Bulgaria. Both Bulgaria and Romania share the two last positions in the EU in terms of purchasing power, while Luxembourg, the Great Britain and the Netherlands rank first in this top. The purchasing power indicates how much of the minimum salary people from the same country spend for the same product.
Where do we shop?
Currently, 33% of the Romanians shopping are in organized commercial chains, such as supermarkets, hypermarkets, and cash&carry, while in Bulgaria the ratio is just 25%. This type of commerce is expected to make up 40% of the entire fast-moving consumer goods (FMCG) sales in Romania by the end of this year.
The value of the Romanian FMCG market is estimated at over €40 billion in 2007, increasing by 17% year-on-year. The Bulgarian market is valuated at half of this figure, and its annual growth pace is 9-10%. The increase registered in Romania is mainly due to a higher purchasing power and the aggressive expansion of modern commercial networks.
The Romanian and Bulgarian modern commerce is dominated by international groups. Main multinational retail chain operating in Romania are Carrefour, Auchan, Louise Delhaize, Spar, Tengelmann, Metro, Rewe and Lidl&Schwarz, the last three also present on the Bulgarian market.
Bulgarians top loan race
The money race is placing Bulgaria ahead of Romania, as far as loans for companies and individuals are concerned. However, Romania’s financial market has a higher growth potential and is less submitted to risks of high debt degree.
Romania is still ranking among the last EU countries, in terms of financial intermediation - an estimated 33.4% this year, from 27.3% in 2006. Bulgaria’s forecast for 2007 is of 50% financial intermediation degree, compared to 48% in 2006.
To narrow the gap and get close to the EU average by 2014, as central bank officials forecast, the non-governmental credit should have a 13.5% increase per year. On the other hand, Bulgarian authorities took restrictive measures on loans, fearing a massive growth of consumer loans.
As for mortgages, loans for real estate acquisitions account for only 30% of the total credits in Romania and is slightly higher in Bulgaria, compared to the EU average of 75%. The two EU’s newest members have the highest ratio of consumer credits in the entire Union. Moreover, consumer credits are used for FMCG, placing further pressure on the imports in the two countries.
Bulgarians are more aware of their obligations to reimburse loans, with a ratio of unpaid rates of 2.2% in 2006, compared to 2.8% in Romania.
Sofia, less expensive than Bucharest
Sofia is the cheapest European capital, ranking 108 in a living standard top made by consultancy company Mercer Human Resources, while Bucharest is on the 78th place.
Living costs in Bucharest rose dramatically after EU integration and the Romanian capital went up 36 places in the 2006 top, while in 2004 it was on Sofia’s current position as Europe’s cheapest capital city.
Compared to New York, which Mercer gave 100 points, living costs received 79 points in Bucharest and 72.5 in Sofia. The Mercer study quantifies some 200 indicators for each location - costs related to rent, transportation, food, clothing, services and entertainment. Both Sofia and Bucharest are “friendlier” to expats than the most expensive cities worldwide - Moscow, London, and Seoul. Regarding the quality of life, neither city has a great position (Bucharest - 108, Sofia - 116), and are both quite far from the most hospitable city in the world, Zürich. Inside the EU, Bucharest, with 77 points, and Sofia, with 74, are on the last two places.
Housing prices went up considerably in the last few years, not only in Romania, but in Bulgaria too. The Romanian residential market increased by 15 percent year-on-year since 2003-2004.
“In the last 3-4 years, housing prices in Bulgaria increased by 100 percent, in large cities they even tripled. The most expensive Bulgarian cities are Sofia and Varna,” said Dobromir Ganev, managing director of Bulgarian company Foros National Real Estate. In Romania, the most expensive city is by far Bucharest, followed by Cluj-Napoca, Timisoara, Constanta and Brasov. While in Bucharest, the average price is €700-1,500 per sqm, in Sofia the range is €200-500 per sqm.
Acest articol nu reprezintă consultanță financiară.
