Monitoring Bulgaria: A Focus On Public Finances

Bulgaria is experiencing resilient domestic demand but faces a slowing consumption cycle and fiscal challenges. Growth is expected to moderate in 2026-2027 while the government works to address budget deficits.

Key Takeaways

• 1.Bulgaria's GDP growth is projected to moderate to 2.6% in 2026 and 2.5% in 2027 as the consumption cycle loses speed.
• 2.Fiscal policy is under increased scrutiny, with the 2026 draft budget targeting a 5.7% deficit, posing potential risks for an Excessive Deficit Procedure.
• 3.Inflation remains elevated due to internal demand and energy shocks but is on a downward path toward the 3% target by 2027.

Table of Contents

• Bulgaria at a glance
• GDP growth: moderation expected but fundamentals remain robust
• Industry: recovery is yet to be seen
• Balance of payments: domestic demand driving imbalances
• Inflation: sticky but on a downward path
• Fiscal: increasing attention on sustainability

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