The World Bank has cut its growth forecast for Bulgaria's economy in 2027 from 2.9% to 2.6%, according to a report titled "Jobs, Firms and Productivity: Making AI Work", released today.

This follows our earlier report on the World Bank's forecast, presented at a forum in Sofia, where the bank's senior economist Desislava Nikolova spoke about the structural hurdles holding back growth in Bulgaria.

For 2026, the outlook stays the same as in the spring and June estimates: 2.6%. Growth last year stood at 3.1%, and the bank expects 2.7% for 2028. Over the next two years growth will hold near 2.6% a year.

The budget deficit will reach 5.3% of GDP this year, up from 3% last year. The bank blames fast-growing social spending, higher municipal investment and bigger energy subsidies.

Strong domestic demand — higher real wages, rising lending and looser budget policy — has propped up the economy, but it has also pushed up inflation and widened the deficit. Tighter budget policy and slower real wage growth will slow growth over the next two years, the bank forecasts. For households, that means less extra cash in their pockets.

The bank expects growth of 2.2% this year for Europe and Central Asia, rising to 2.4% in 2027 and 2.6% in 2028, after the region posted 2.6% in 2025. Excluding Russia, growth is higher: 3% this year, 3.4% in 2027 and 3.7% in 2028. Weaker growth in the EU is holding back exports and industry across the region. A modest pickup in the EU in 2027 and 2028 will help Central Europe. The report gives no separate figures for the EU or the eurozone.

Bulgaria ranks third in Europe and Central Asia for data centre capacity per head, with 2.89 megawatts per million people. Only Poland, with 6.62 MW, and Russia, with 3.82 MW, rank higher. The regional average is 2.1 MW, while high-income countries outside the region reach 31.6 MW. Just three countries in the region pass 1 MW per million people.

A shortage of computing power is one of the biggest barriers to the wider use of artificial intelligence, the bank says. Fewer than 1% of the world's 500 most powerful supercomputers are in Europe and Central Asia.

Last year, 8.5% of Bulgarian firms with at least 10 staff used at least one AI tool, against an EU average of 20%. More than 90% of job ads seeking such skills are in the Sofia region, a concentration that risks widening the gap between different parts of the country.

Generative AI is hitting the business services sector hardest, where many of Bulgaria's highly skilled workers are employed. There is no mass displacement of workers yet, but the bank expects routine tasks to be automated while people shift to oversight, quality checks and more complex work.

"The main risk over the next decade is likely to be too little adoption and adaptation to AI, not too much of it," said Ivailo Izvorski, the World Bank's chief economist for Europe and Central Asia.