Bulgaria's economy will speed up to 3.5% growth in 2027 and will grow faster than the EU and eurozone averages through 2028, according to the October forecast from EY's economic analysis team, BTA reports.
Higher inflation will come with it. Prices in Bulgaria will rise 4.4% on average in 2027, more than in the eurozone.
The analysts expect gross domestic product (GDP), the value of everything the country produces in a year, to grow 2.9% in 2026 and 3% in 2028. For 2027, the forecast for Bulgaria is above those for Germany (1.2%), France (0.7%), Spain (1.9%) and Poland (3.1%). EU growth will average 1.4% in 2026, 1.7% in 2027 and 1.4% in 2028. For the eurozone, the figures are 1%, 1.4% and 1.3%.
EY has three scenarios for Bulgaria. In its base case, growth in 2027 is 3.5%. In the optimistic case, it is 3.7%. The adverse case assumes a long energy shock and growth of 2.9%. In all three, the economy grows.
Annual inflation in Bulgaria was 5.6% in September. EY expects an average of 5.4% in 2026, with price rises slowing to 2.5% in 2028. If the energy shock drags on, inflation in 2027 could reach 7%. If things go well, it will fall to 3.1%.
The analysts say Bulgaria is among the southern European countries with stronger price pressure, because dearer energy also raises the cost of tourist services. Central and Eastern European countries are hit harder by higher energy prices. Energy takes a bigger share of household spending there, and swings in currency rates add to the effect.
In the eurozone, inflation was 3.8% in September 2026. EY says it will stay close to that level in the coming months, then ease gradually to 2% by mid-2028. The forecast for 2027 is an average of 3.1%. Prices there are rising mainly because of energy, while core inflation is fairly steady.
After the rate rises in September, the analysts expect one more increase in key interest rates. As of October, markets are betting on an even sharper rise in the cost of credit. Rates will probably stay unsettled for longer. For families, that means dearer loans and slower growth in buying power. For firms, the cost of credit will weigh on decisions to invest.
The euro has weakened because of dearer energy and worries about public finances. That makes imports pricier and adds to price pressure. Against the euro, the Polish zloty and the Swedish krona fell, while the Norwegian krone rose because Norway exports oil and gas. The Romanian leu is under fresh pressure from political uncertainty, high inflation and a narrowing gap in interest rates.
Household spending in the eurozone is slowing because higher prices eat into real incomes. Its growth falls from 1.5% in 2025 to 1% in 2026 and 0.7% in 2027. Investment and exports are holding up better, thanks to government spending and money going into artificial intelligence. EY's short-term estimates show growth held steady in the third quarter despite costly energy and harder access to credit. Surveys of how people and firms feel are more upbeat than the actual data.
The analysts link Europe's staying power to higher government spending in Germany and the boom in AI investment in the US. Germany is recovering step by step, while France is growing weakly. Spain and Poland are doing better than most large EU economies, though both are expected to slow.
EY says the risks point both ways. The biggest unknown is how long the conflict in the Middle East will last and what happens to energy prices. Growth could be weaker if tensions escalate around the world, trade breaks up into blocs and tariffs rise. Other risks are new disruptions to energy supplies, pressure on public finances, sharp falls on capital markets and the climate. Faster use of AI, investment in infrastructure and defence, structural reforms and lower trade barriers could bring a better result.
The analysts' overall picture for Europe is growth, but with weaker spending, dearer money and big gaps between countries.