The positive trends in Bulgaria's economic development in 2004 give grounds to expect that economic growth in the first half of 2005 will be about 5.2-5.3% and that the industry's value added will increase by 7 to 8%, the latest Economic Review of the Bulgarian National Bank (BNB) reads. As a result of seasonal factors and higher excise duties on beer and spirits inflation may reach 2% by the end of the first quarter. However, by the middle of the year it will be compensated by the seasonal drop in food prices, the analysis reads. The 2004 cumulative inflation of 4% was close to the expected rate, the BNB recalls. At the end of 2004 the country's forex reserves reached EUR 6.770 billion. The average daily value of the minimum mandatory reserves commercial banks hold with the BNB increased by BGN 657 million in December, compared to their June level. The fluctuations in the international situation last year did not affect Bulgaria's economy, the BNB says. Its development remains sustainable and growth is high thanks to active domestic demand and rising exports. The improved competitiveness of the economy favours the expansion to foreign markets and has a relatively restrictive effect on imports, as supply and demand of local goods is bigger. The BNB will continue to take measures to enhance control over credit quality and increase. Though the relatively high rate of lending rise does not create immediate threats for the country's financial stability and interest rates are declining, in the event of a change in the economic situation banks' credit portfolio may worsen, the central bank says.