Three scenarios for the development of the Bulgarian economy through 2028 have been outlined in the annual report of economists from the Bulgarian Academy of Sciences (BAS). Bulgaria is entering 2026 with stronger domestic demand, a more pronounced investment impulse and an active credit market, but also with a weaker external position, according to the document titled “Economic Development and Policies in Bulgaria: Assessments and Expectations” by the Institute for Economic Research. The report reviews global and national economic developments over the past year and provides medium-term forecasts.
The projection up to 2028 is developed in three scenarios, reflecting how growth, inflation, external balance and public debt depend on the external environment, financial conditions and fiscal policy parameters.
According to the researchers, the baseline outlook remains relatively favourable, but under significantly higher external uncertainty. Real GDP growth is expected to moderate to 1.6% in 2026, rise to 2.5% in 2027, and reach 3.5% in 2028.
Inflation is projected to decline gradually – 3.7% in 2026, 2.9% in 2027, and 2.4% in 2028. The economists describe this as a limited stagflation-like configuration, marked by lower growth, elevated inflation, and a weaker fiscal and external position.
Even under an optimistic scenario, they note, there is no automatic stabilization of debt dynamics. This, they argue, requires cautious fiscal policy, maintenance of buffers against energy and logistical shocks, and close monitoring of inflation, interest rates, and public debt.
The report stresses the need to transform Bulgaria’s growth model from consumption-driven to one based on productivity, human capital, and high value-added exports.
It also highlights that Bulgaria’s membership in the eurozone brings institutional and financial advantages but does not automatically accelerate growth without higher investment, technological upgrading, and improved labour productivity. According to the authors, the successful exit from the currency board regime can be assessed as an institutional achievement that helps avoid the most negative scenarios surrounding euro adoption.
The review of economic activity in 2025 shows continued growth, but with increasing reliance on domestic demand and a weakening external position. Future growth quality, the report says, will depend on a shift from consumption and imports toward investment, industrial modernization and higher value-added production.
The economists warn that it is not sustainable to finance permanent social and administrative expenditures through rising debt. They call for a combination of revenue measures, greater efficiency in public spending, and stricter control over public investment. In their view, the key fiscal risk is not the level of public debt itself, but the persistent financing of structural expenditures through new borrowing in the context of weak investment efficiency. A shift from pro-cyclical to counter-cyclical fiscal policy is recommended.
The 2026 report also focuses on the fundamental drivers of price formation in the Bulgarian economy. The economists have developed an original Index of Production Factor Prices, based on 27 indicators, which tracks the transmission mechanism between input costs, producer prices, and final consumer prices. They find that electricity, gas, wheat, and wages account for over 80% of changes in producer prices.