16 Jan 2024

In search of solutions: Euromoney’s Forum for Central and Eastern Europe addresses regional challenges

Glavbolgarstroy's CEO discusses the interaction between inflation and green transition in the construction sector


For the 29th consecutive year, Euromoney's leading forum in the financial sector for Central and Eastern Europe (CEE) brought together representatives from the European Commission, the European Bank for Reconstruction and Development, the European Investment Bank, Deputy Finance Ministers of Georgia, Armenia, and Ukraine, State Secretaries of the Republic of Croatia and Hungary, key central bank governors of the region, investment intermediaries, and representatives of the business community. The forum focused on the financial and economic challenges facing the countries of the region.

Georgia's Deputy Finance Minister, Mirza Gelashvili, attributed the country's 5 percent GDP growth to the ambitious reform program Georgia is pursuing, its low tax rate, and "reasonable spending" of taxes. Hrvoje Bujanovic, State Secretary at the Ministry of Economy and Sustainable Development in Croatia, where GDP growth is 3% - mainly thanks to exports, noted that recent years have been difficult for the country due to challenges such as earthquakes, supply chain problems, and geopolitical uncertainty. However, he added that tight fiscal policy has helped address these issues.

Tibor Toth, State Secretary for Macroeconomic and International Affairs at the Ministry of Finance of Hungary, also commented on challenges like high energy prices and resulting inflation. "Although economic growth is high and sustainable, it cannot cover inflation, and GDP is negative," he said.

As a speaker at the event, Emil Angelov, CEO of "Glavbolgarstroy Holding," shared his observations on the dynamics in the construction sector, economic factors related to inflation and the green transition, the "overheating" of the labor market in Bulgaria, and the decrease in productivity. Angelov discussed the role of effective state policies in balancing and promoting sustainability. "Investments in green technology and infrastructure, driven by the drive for sustainability in various industries, move us forward in solving global environmental problems. However, at the same time, they can increase inflation," he believes.

"The green transition in the construction industry can lead to increased demand for sustainable building materials and energy-efficient technologies. However, this shift could also lead to higher upfront costs and increased demand for sustainable materials, potentially contributing to sector inflation. State incentives and supporting policies can mitigate these challenges and encourage the industry to adopt environmentally friendly practices without significantly affecting inflation," Angelov added, explaining that such incentives could include tax credits or subsidies for the use of sustainable materials and the implementation of energy-efficient building practices.

"We must bear in mind, however, that if these incentives cause a surge in demand without a corresponding increase in supply, this could lead to higher prices for materials and labor, and hence, an increase in inflation in the construction sector. Effective policies must strike a balance between promoting sustainability without causing undue inflation,” he stated.

As a sustainable approach that can be well combined with these types of measures, Angelov pointed to the shift from a linear to a circular model in the use of resources in the construction industry. This involves reducing construction and demolition waste, implementing recycling practices in the construction process, producing high-quality recycled materials, and designing buildings with deconstruction in mind to facilitate material reuse and selective demolition.

"A good example of such a circular model is the MOBICCON-PRO project, on which Glavbolgarstroy is working. It is co-financed by the EU under 'Horizon Europe', the largest European research and innovation program. This is a pilot project to equip a mobile installation for the production of high-quality and innovative construction materials from construction and demolition waste, integrating a closed loop of water recycling without wastewater."

Regarding the leading drivers of the ESG transformation in Central and Eastern Europe - whether it's the EU, governments, capital investors, or companies - Angelov shared his view that while European institutions and national governments were leaders in the past, in recent years, companies have become the driving force. "They are already seeing the practical benefits of the ESG transformation of their business, which is expressed in increased corporate reputation and, above all, consumer demand for sustainable products and solutions," he said.

The flagship event for global banking and financial markets will continue tomorrow with a summit on promoting securitization in Central and Eastern Europe.

Emil Angelov assumed the position of CEO and Deputy Chairman of the Management Board of "Glavbolgarstroy Holding" at the beginning of 2024. With over 30 years of experience in the banking and financial sector, Angelov has held senior management positions in various banking and leasing groups, both Bulgarian and internationally owned. In 2010, while serving as Deputy CEO of Bank Piraeus Bulgaria, he also assumed the position of CEO and member of the Management Board for several leasing companies within the Piraeus Group. He managed these companies until their successful sale to a Bulgarian financial investor in 2016. That same year, he became the CEO of 'Bank Piraeus Bulgaria', a role he retained until June 2019. After 2019, Emil Angelov shifted his primary professional focus to the real estate and construction sectors, once again holding high managerial positions.