Bulgaria Has Reached 2/3 of the Average European GDP per Capita, but Convergence Is Not Guaranteed

Adrian Nikolov, Institute for Market Economics

For another year Bulgaria shortens the distance with the average level of economic development of the EU. This is according to the preliminary estimates of GDP per capita in purchasing power parity. In 2024, the country passes the psychological limit of 2/3 of the European average, but catches up at a significantly slower pace than Romania.

France (99) and Finland (103) are closest to the European average in 2024, maintaining the usual distribution in which the “new” member states are grouped in the lower half and the “old” in the upper half. Leaving aside the atypical economies of Ireland and Luxembourg[1], the most advanced European economies – Sweden, Germany, Austria, Belgium, Denmark, the Netherlands – are located in the 115-130% range of the European average. In recent years, all new Central and Eastern European (CEE) EU members, including Romania, have reached levels between 70% and 90% of the EU average. Among them, only the Czech Republic and Slovenia have surpassed the 90% threshold, while Latvia, Slovakia, Hungary, Croatia and Romania remain in the 70-80% range.

Bulgaria’s convergence since 1999, when the indicator reached its lowest point of 28%, has been smooth and constant. Since then, the country has been catching up at a rate of 1-3 points per year, with two distinct slowdowns in 2005, during the financial crisis in 2009 and most recently in 2013. The last major crisis – the pandemic and its aftermath – led to an acceleration, a consequence mostly of deeper recessions in major Western economies. In the period since the clear opening of the horizon for Bulgaria’s EU membership at the end of the last century, the Bulgarian economy has grown steadily faster than that of the EU.

In recent years, the actual comparison has been with Greece’s economy, which in 2020 has fallen to a level of 62% of the European average – its greatest gap in decades. However, the country’s reforms are having a clear effect, and today it is again above 70% of the European average GDP, and there is no prospect of Bulgaria overtaking it in the coming years. However, the convergence is more than evident – while in 2006 the value of the indicator for Bulgaria was 38% and Greece peaked at 96%, today the two countries are moving in parallel.

The comparison with Romania is also interesting. Romania started from a lower position than Bulgaria before the two countries’ accession to the EU, but managed to pass the 70% mark already in 2020, and if current trends continue, it will most likely surpass 80% next year and will rank among the richer countries in Central and Eastern Europe. Although there is no single explanation for the divergence between Bulgaria and Romania in recent years, we cannot fail to mention our northern neighbours’ much better performance in the rule of law and the fight against corruption, as well as its better ability to attract investment.

It is important to note that the target is not static – the average European level of economic development changes every year, mostly influenced by the dynamics of the major Western countries. This, in turn, means that we cannot simply assume that Bulgaria will continue to approach the EU average at the current rate and achieve this target in 15-20 years. Judging by the rates of most CEE countries, on the contrary – the likelihood that the country will reach 70-75% and stay at that level as growth slows is just as real, especially in a scenario with low investment, high deficits and rapidly growing public debt.

[1] The former has a very particular GDP structure because of the multinational comapnies that operate in it, the latter is very small in size.