The Bulgarian economy is expected to grow to 3.2% in 2025, according to a new report by the European Bank for Reconstruction and Development (EBRD) on regional economic prospects. The report was published on the EBRD website on 25 September.
This forecast is an upward adjustment by 0.4% from earlier forecast. The growth is expected to moderate to 2.6% in 2026, which is unchanged from the spring forecast. This growth is contingent on sustained public investment, while eurozone accession could boost trade and private investment including FDI, the EBRD says.
Looking back at the Bulgarian economy, the report says that after accelerating to 2.8% in 2024, real GDP growth rose further to 3.2% year on year in the first half of 2025. Despite some moderation of wage growth, private consumption was resilient, while the unemployment rate fell to 3.6% by mid-year. Inflation rose to 5.3% in July 2025, driven partially by an increase in the rate of value-added tax (VAT) levied on bread and restaurants to 20%.
After a weak 2024, investment has also rebounded on higher public capital spending. On the downside, exports fell in annual terms, as exports of energy products and raw materials contracted. Government spending increased by 20% in the first half of 2025, while revenues increased by just 13%, raising fiscal risks.
Nevertheless, following the approval of eurozone accession, Bulgaria is benefiting from credit rating upgrades and lower financing costs.
The report also points out that US tariffs on EU exports will negatively affect Bulgaria’s industrial production and exports.