This report covers the key macroeconomic and financial releases as well as the political events from Bulgaria for the period of May 8, 2014 - June 5, 2014.

Bulgaria's economic growth for the first quarter of 2014 was revised up to 1.2% y/y from a flash estimate of 1.1% because of higher government spending and increase in business investment.

Meanwhile, the EBRD has upgraded marginally its 2014 GDP growth forecast for Bulgaria to 1.9% in the May edition of its Regional Economic Prospects from 1.8% expected in January 2014.

The unemployment rate (age 15 and more) fell by 0.8pps y/y to 13% in the first quarter of 2014, with the number of unemployed declining by 23,400 to 433,000.

The average gross monthly wage rose 2.3% y/y to BGN 796 (EUR 407) in Q1 2014 after increasing 3.1% y/y in the last quarter of 2013.

Industrial production increased 4.2% y/y in March 2014, retreating from a 5.9% annual growth the month before (revised down from an initial 6.5% growth estimate) on slower manufacturing output growth. Retail sales (autos excluded) rose 5.8% y/y in real terms in March 2014, slowing from a 9.3% y/y growth a month earlier.

The overall business sentiment indicator increased by 4.3 points on the month to a 5.5-year high of 24.5 in May 2014 on across the board improvement in managers' outlook.

Consumer price deflation eased to 1.6% y/y in April 2014 from 2.3% the month before mainly due to a slower decline in food prices, according to statistics office data. In monthly terms, consumer prices inched up 0.3% in April, reversing a 0.2% monthly drop in March. Food prices fell 1.1% y/y in April, easing from a 2% decline in the previous month as a result of the fading low base effect of last year's exceptionally good harvest.

The centre-left ruling coalition seems to be collapsing and early elections might be just around the corner after Lyutvi Mestan, leader of the junior coalition partner MRF, said on Thursday (June 5) that the government will not be able to complete its four-year mandate and outlined three snap poll scenarios, giving preference to a vote by the end of 2014.