Bulgaria: Economic and Political Overview
Since the beginning of the century, Bulgarian authorities have maintained macroeconomic stability, supported by a currency board arrangement and prudent fiscal policies. This has enabled the country to navigate recent crises effectively while staying on a steady path of income convergence. After the energy price shock in 2022 and weak external demand in 2023, Bulgaria's economy grew at a faster pace in 2024, reaching 2.3% compared to 1.8% the previous year, driven by both domestic and foreign demand, along with an expansionary fiscal stance. Growth is projected to rise to 2.5% in 2025 before easing to 2.8% in 2026 (IMF). The deployment of unlocked EU funds is expected to boost both public and private investment, which was restrained in 2024. Low unemployment and strong real income growth will continue to drive household consumption, while export growth is anticipated to recover alongside external markets. Inflation is likely to remain near current levels, though a further minimum wage increase in 2025 and ongoing labour shortages will sustain wage pressures.
Bulgaria’s general government deficit rose to 3% of GDP in 2024 (from 2% in 2023) due to higher public pensions and salaries approved in 2022, outweighing revenue gains from social security contributions and direct taxes. Measures to boost revenue included tighter control of high-risk goods and maintaining a 100% dividend on state-owned enterprises. According to the EU Commission, in 2025, the deficit is expected to edge up to 2.8% of GDP as pension and salary spending continues to rise, though at a slower pace. Public investment is set to increase, driven by RRP implementation and military spending accruals. Social security contributions should grow in line with wages, while corporate tax revenue is expected to decline. The deficit is projected to remain at 2.8% of GDP in 2026. The debt to GDP ratio – at 23.7% in 2024 – is set to increase marginally to 27.1% by 2026, still very low compared with EU countries. After decelerating steadily over 2023, Bulgaria's average annual inflation in 2024 was 2.4%, according to NSI data. In 2025, inflation is expected to ease to 2.3%, driven by negative energy inflation, low industrial goods inflation, and base effects from 2024's tourist service price hikes. According to the 2024 Convergence Report, Bulgaria met all euro-adoption nominal criteria except for price stability. The country is expected to adopt the euro by 2026.
Unemployment remained low in 2024, with manufacturing job losses offset by public sector and services hiring. Employment grew alongside higher participation rates, while wage growth accelerated due to labour market tightness and a 19.6% minimum wage hike in January. With a shrinking unemployed population, employment is expected to remain stable. The country officially attained high-income status on July 1, 2024, with a GDP per capita (PPP) estimated at USD 39,185 in 2024 by the IMF, still below the EU average. Income inequality in Bulgaria is among the highest in the EU, and almost 30% of the population is at risk of poverty (the second-highest rate in the EU after Romania).
| Main Indicators | 2023 (E) | 2024 (E) | 2025 (E) | 2026 (E) | 2027 (E) |
| GDP (billions USD) | 101.61 | 108.43 | 115.53 | 121.86 | 128.06 |
| GDP (Constant Prices, Annual % Change) | 1.8 | 2.3 | 2.5 | 2.8 | 2.7 |
| GDP per Capita (USD) | 15,765 | 17,069 | 18,456 | 19,623 | 20,789 |
| General Government Balance (in % of GDP) | -3.3 | -2.9 | -3.0 | -2.5 | -3.2 |
| General Government Gross Debt (in % of GDP) | 22.0 | 23.7 | 25.4 | 27.1 | 29.0 |
| Inflation Rate (%) | 8.6 | 2.8 | 2.6 | 1.9 | 2.0 |
| Unemployment Rate (% of the Labour Force) | 4.4 | 4.3 | 4.2 | 4.1 | 4.0 |
| Current Account (billions USD) | -0.27 | -1.04 | -1.92 | -1.25 | -1.59 |
| Current Account (in % of GDP) | -0.3 | -1.0 | -1.7 | -1.0 | -1.2 |
Source: IMF – World Economic Outlook Database, October 2021
Traditionally an agricultural country, Bulgaria is now considerably industrialized. In fact, the agricultural sector only accounts for 2.5% of GDP and employs 5.7% of the workforce (World Bank, latest data available). The main crops are sunflower, tobacco, and wheat. Around 41% of the country’s territory is considered agricultural land. The total number of agricultural holdings is 132,742, while the total number of registered farmers in 2021 was 76,372 (EU Commission, latest data available). According to preliminary NSI data, in 2024, the agricultural industry's final output at basic prices totalled BGN 9,440.6 million. The gross value added at basic prices fell by 9.9% compared to the previous year, amounting to BGN 3,798.9 million, while the net entrepreneurial income was BGN 889.1 million.
The industry represents 22.7% of the GDP, and 29.6% of the workforce is employed in the sector. It continues to rely heavily on the manufacturing sub-sectors (metallurgical, chemical, machine-building), which are estimated to contribute to 14% of GDP (World Bank). The manufacturing and mining sectors play a crucial role in Bulgaria’s economy, making significant contributions to industrial production and employment. However, these sectors are currently facing challenges such as high energy consumption, outdated equipment to some extent, and a heavy dependence on fossil fuels. The most dynamic sectors are textile, pharmaceutical products, cosmetic products, mobile communication, and the software industry. Bulgaria's main mineral resources include bauxite, copper, lead, zinc, coal, lignite (brown coal), and iron ore.
The tertiary sector has more than doubled its contribution to the country’s economy since the end of the communist system, accounting for 62.5% of GDP and employing around 64.7% of the workforce. Tourism is one of the fastest-growing sectors: it was estimated to contribute 3.1% of GDP before the pandemic. The sector showed signs of recovery in 2024, when Bulgaria welcomed 13.24 million tourists, 4.9% more than the previous year, surpassing the level recorded in 2019. According to the latest figures from the European Banking Federation, 23 banks are currently operating in Bulgaria, six of which are foreign bank branches. The top five banks hold approximately 76.8% of all assets. In 2023 the banks’ total assets increased by 10.7% year-over-year to EUR 87.98 billion.
| Breakdown of Economic Activity By Sector | Agriculture | Industry | Services |
| Employment By Sector (in % of Total Employment) | 5.7 | 29.6 | 64.7 |
| Value Added (in % of GDP) | 2.5 | 22.7 | 62.5 |
| Value Added (Annual % Change) | -15.3 | -4.1 | 4.6 |
Source: World Bank, Latest Available Data. Because of rounding, the sum of the percentages may be smaller/greater than 100%.
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The Economic freedom index measure ten components of economic freedom, grouped into four broad categories or pillars of economic freedom: Rule of Law (property rights, freedom from corruption); Limited Government (fiscal freedom, government spending); Regulatory Efficiency (business freedom, labour freedom, monetary freedom); and Open Markets (trade freedom, investment freedom, financial freedom). Each of the freedoms within these four broad categories is individually scored on a scale of 0 to 100. A country’s overall economic freedom score is a simple average of its scores on the 10 individual freedoms.}}
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Source: Index of Economic Freedom, Heritage Foundation
The business rankings model measures the quality or attractiveness of the business environment in the 82 countries covered by The Economist Intelligence Unit’s Country Forecast reports. It examines ten separate criteria or categories, covering the political environment, the macroeconomic environment, market opportunities, policy towards free enterprise and competition, policy towards foreign investment, foreign trade and exchange controls, taxes, financing, the labour market and infrastructure.
Source: The Economist Intelligence Unit - Business Environment Rankings 2020-2024
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