Preliminary GDP data for 2024 surprised on the upside, with GDP growth accelerating to 2.8%against 1.9% in 2023. Despite the underperformance of exports, strong domestic consumption—both on the household and the government side—propped up growth, supported by build-up of inventories.

Following gradual deceleration since 2023, annual average inflation—as measured by the Harmonized Index of Consumer Prices—declined to 2.6% in February, meeting the corresponding Maastricht criterion of 2.7%. The positive outturn followed shortly after the government requested extraordinary convergence reports from the European Commission and the European Central Bank, supporting the country’s bid to join the eurozone from start-2026.

Bulgaria’s fiscal position has loosened since the onset of the multiple crises in 2020. Despite that, the headline deficit was at 3% of GDP in both 2023 and 2024, while the public debt to-GDP ratio continued to rank among the lowest in the EU. The poverty rate (at $6.85/day 2021 PPP poverty line) is expected to decline gradually to 4% in 2024, but progress remains slow. Bulgaria’s strong 2024 growth, fueled by rising wages and robust consumption, may help reduce poverty by boosting household incomes.

Economic growth is forecast to slow down markedly in 2025-2026 due to global trade uncertainty. Bulgaria will feel the impact mostly through the indirect effect on the EU economy, global activity,and investment sentiment. As raw materials represent 40% of Bulgaria’s exports, the economy will be affected through the commodity price channel, too.

The worsened economic outlook for 2025 is expected to weigh on revenue collection and threaten the attainment of the 3% budget deficit target unless the government takes measures to curb expenditure.

If Bulgaria joins the eurozone in 2026 this is anticipated to positively influence the country’s medium-term economic outlook.

Going forward, external risks remain tilted to the downside due to a complex geopolitical environment. Domestically, the unabated growth of credit to households, mirrored by an ongoing construction boom, remains on the radar, particularly in the context of a slowing economy.