Economic Outline

Economic Indicators

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).

Any Comment About This Content? Report It to Us.