Bulgaria's economy will remain one of the fastest-growing in Europe, according to Coface Group. It forecasts that gross domestic product, the value of everything produced in the country in a year, will grow by 2.2% in 2026 and 2.4% in 2027.
Growth comes mainly from spending by the state and households, but that is losing strength and the external environment remains risky, said Bruno de Moura Fernandez, head of macroeconomic research at Coface Group.
Fernandez spoke today in Sofia at Coface's annual risk management conference, held at Event Space 2020. It is the 11th edition, and the theme is "War for Markets". Fernandez is taking part for the third time in a row. He presented risks for individual countries, the economic and geopolitical factors affecting international markets, and the main indicators for Bulgaria.
Faster growth is expected because Bulgaria has one of the lowest GDPs per head in Europe, he explained.
Wages are rising by less than 10%, but that is still above inflation of 5%, so buying power is still growing, and much faster than in previous years. But wage growth is cooling, which weakens the boost from consumer spending.
Investment is hard to attract, and business confidence is still weak after the Covid pandemic, Fernandez believes.
Exporters are doing well. He gave copper going to Italy and electricity going to Romania as examples. The price of copper is rising, and Bulgaria is one of Europe's leading producers of the metal. Electricity is going to Romania because of installed storage batteries, most of them imported from China, and because Romania has had trouble with its energy supply in summer.
Construction is also growing, and Bulgaria is an exception in the region for building permits. Fernandez does not rule out that the property market has had a speculative element, especially in 2025, when the country was about to join the eurozone. Overall, he said, the growth is structural, meaning lasting.
Low household debt will also support construction. "Mortgage rates are around 2%. Inflation is 5%. That means a negative real interest rate," Fernandez told BTA.
Coface says the good outlook for Bulgaria is down mostly to domestic factors. Among external risks, Fernandez named disruption to shipping routes, costlier transport and energy, faster inflation and rate rises by major central banks.
On France, he does not rule out the European Central Bank stepping in on debt markets if the price of French debt jumps sharply. For now, he expects the bank to wait first for the French authorities to act.