The Bulgarian Apparel and Textile Industry in the First Half of 2006

The textile and clothing industry plays an important role in the Bulgarian economy. In 2004, the production of textile and apparel amounted to 7.6per cent of the production of the Bulgarian industrial enterprises, while the people employed in this sector constituted 31 per cent of the staff employed in the manufacturing industry. Over the period 1999 - 2004, the average per cent of increase in the Bulgarian textile and apparel manufacturing was 20.4 per cent.

In 2005 the Bulgarian textile and apparel industry produced and exported as much as in 2004. In the context of liberalization of the international trade in apparel and textile and the increased production costs, we considered this significant success.

After the recession of last year, the textile and apparel sector has grown again in the first half of 2006. The textile and apparel export increased by 6.8 per cent compared to the same period last year.

The sector has been extremely export-oriented (the export value amounted to 1.72 billion BGN in the first half of 2006) and sustains a positive trade balance. Over the period January - June 2006, the textile and apparel export amounts to 15.5 per cent of the total export value of Bulgaria and 27.6 per cent of the export value of Bulgaria to the EU.

Manufacturing Sector Indexes

In June 2006, the manufacturing textile sector index was 102.7 compared to the same period of 2005 and 248.1 compared to June 2000. In June 2006, the apparel production index, including leather apparel, was 114.1 compared to the same month in 2005 and 216.4 compared to June 2000.

Demand in the Internal Market

Over the first half of 2006, the retail trade in apparel, textile, footwear and leather goods has increased by 10.2 per cent compared to the same period of 2005 and doubled compared to the first half of 2000. The indexes are calculated on the basis of the income from sales in the internal market.

Export - Import

In the first half of 2006, the Bulgarian total export value of textile and apparel in accordance with chapters 50 - 63 of the customs tariffs amounted to 1 720 mil BGN, which is an increase by 6.8 per cent compared to the same period of 2005.

The export of textile has increased by 14 per cent and amounts to 289 mil BGN or 16.8 per cent of the total export value of textile and apparel. The biggest increase has been made in accordance with the following customs tariffs on textile: Chapter 60 - Knitted or crocheted fabrics: + 68.4 per cent, Chapter 59 - Impregnated, coated, covered and laminated textile fabrics: + 50.7 per cent and chapter 51 - Wool and woven fabric: +39.4 per cent. There is a decrease in the export of goods in accordance with chapter 52 - cotton: - 38 per cent and chapter 58 - Special woven fabrics; tufted textile fabrics; lace tapestries; trimmings; embroidery.

The export of apparel in accordance with chapters 61 - 63 of the customs tariffs has increased by 5.5 per cent compared to the same period of 2005. The export of "Articles of apparel and clothing accessories" in accordance with chapter 61 has increased by 4.9 per cent, which is a positive change in comparison to the last year's decrease. The export of "Articles of apparel and clothing accessories, not knitted or crocheted" in accordance with chapter 62 has been increasing (+5.5per cent).

86 per cent of the Bulgarian export of textile and apparel is exported to the EU member-states. There is a significant increase in the export value of textile and apparel to the EU - it has increased by 10 per cent compared to the same period last year.

Bulgaria's second biggest export market after the EU is Turkey. However, the export value to Turkey has been decreasing - it has decreased by 3 per cent compared to the same period of 2005.

The export value to the USA has also been drastically decreasing - it has decreased by 16 per cent compared to the same period of 2005. Therefore, currently the USA is Bulgaria's fourth biggest export market. This decrease has been marked for three years in a row now.

Romania has become the third biggest export market. The export value to this country has been increasing - it has increased by 6 per cent compared to the same period last year. Unfortunately, it should be mentioned that this increase is mainly due to the fact that big European companies organize their production in Romania and place orders for work to be done with materials supplied by the client in Bulgaria. The Bulgarian textile and apparel exported to Romania amounts to 3 per cent. Switzerland and the Bulgarian duty free zones are the fifth and the sixth biggest markets and both of them have been growing. The export value to Switzerland has risen 2.5 times compared to the same period of 2005.

Our biggest markets in the EU member-states:

Source: Bulgaria National Statistical Institute

There was a significant increase in the export value to the following markets in comparison to the first half of 2005: Poland, Estonia, Slovakia, Slovenia, Finland, Moldova, and Ukraine. Germany is still our main market for store clothes, while Greece - for knitted apparel.

Export of Apparel in accordance with Chapters 61 and 62 of the Customs Tariff in 2005

Source: Bulgaria National Statistical Institute

In the first half of 2006, the total import value of textile and apparel into Bulgaria amounted to 1 412 mil BGN. The sector's positive foreign trade balance amounted to 308 mil BGN - it has increased by 21 per cent compared to the same period of 2005. The import of textile has increased by 6 per cent in comparison to the same period of 2005, while the import of apparel has not changed.

Traditionally, textile stuff, fabrics and accessories, which are mainly imported for final processing work with materials supplied by the client, constitute the biggest part of import - 73.2 per cent. As usual, the main part of import was from the EU member-states (71 per cent of the total import value of textile). The biggest part of work with materials supplied by the client comes from these countries.

As can be seen from the table below, the countries, which export the biggest part of textile and textile stuff, are also the countries, which import the biggest part of apparel. The only exception is China:

Import of Textile and Textile Stuff in accordance with Chapters 50 - 60 of the Customs Tariff

Source: Bulgaria National Statistical Institute

The import of textile from China remained around 3 per cent in the first half of 2006. The import of apparel from China has risen significantly and amounted to 6.7 per cent of the total import value of apparel. In 2005 this import amounted to 4 per cent.

In the first half of the year, the total import value of apparel into Bulgaria has slightly decreased in comparison to the same period of 2005 - the decrease is of less than 1 per cent.

The income from retail trade in apparel, textile, leather goods and footwear in the internal market has increased by 10.2 per cent in comparison to June 2005. The decrease in import of apparel into Bulgaria and the increase in sales of apparel in the Bulgarian market show that the part of apparel, produced by Bulgarian manufacturers and sold in the internal market, has increased.

Costs

The costs of textile and apparel production have slightly risen in comparison to June 2005:

• The costs of textile production index: 103.2 per cent in June 2005 = 100
• The costs of apparel production, including leather apparel index: 105.6 per cent in June 2005 = 100

The production costs in the apparel and textile sector rise comparatively slowly in comparison to the other industrial sectors in Bulgaria. The costs of processing industry index was 113.4 in June 2005 = 100.