Macroeconomic indicators

Bulgaria is recognized by European Union and the United States as a functioning market economy. The Bulgarian economy, in recent years, has achieved a high degree of macroeconomic stability, thanks to a good policy mix achieved through the currency board arrangement (put in place in 1998 to stabilize the currency, the mechanism ties the performance of the lev to that of the euro), a tight fiscal stance, and wage moderation.

Economic growth: rapid and sustainable

The Bulgarian economy continued its expansion at a rate of 5.6% in the first half of 2004. Growth is based on strong domestic demand fuelled by increases in net income, employment and bank credit. While this results in high import growth, exports were also getting stronger over the summer. On the supply side, the good harvest, a strong increase in industrial production and a good tourism season are contributing to the high output growth.

Prospects for 2004-2006

GDP growth is expected to achieve around 5 % for the full year 2004, to accelerate to a rate of 6% in 2005 and to moderate to 4 % in 2006. The acceleration in 2004 and 2005 will be based on continued strong domestic demand resulting in a highly imbalanced growth composition. In 2005, growth will be further stimulated by already announced measures of slightly expansionary fiscal and wage policies in view of national elections by mid-2005. This is likely to be followed by some adjustment in 2006 to rebalance the economy and to bring it closer to its medium-term potential growth rate.

Strong investment in view of the opportunities expected from EU accession in 2007 should prevent the economy from a more significant slowdown.

Strongest sectors

Economic development in Bulgaria is showing very positive trends in various areas, including tourism, the capital market, and the banking system.

Foreign investments

Per capita Bulgaria is the largest recipient of foreign direct investment (FDI) in the region. The future looks promising due to an attractive business environment, market and cost opportunities, and large sources of new technologies and innovations.

Foreign direct investment (FDI) in Bulgaria saw a dramatic increase in the last years.

Bulgarian Economic News