Economic growth in Bulgaria is expected to remain strong at 3% in 2025, before slowing to 2.6% in 2026 and 2.4% in 2027, as forecasted by the Organization for Economic Co-operation and Development (OECD) in its latest report on the global economic outlook for 2025, 2026 and 2027 that was published on 2 December.
Household consumption and the public sector are expected to remain the main drivers of growth in the Bulgarian economy. Investments will be supported by EU funds and improved confidence linked to the introduction of the euro on January 1, 2026. The OECD also notes that Bulgarian export growth is hindered by weak demand in key markets, particularly Germany. According to the OECD report, recent changes in global trade policy, including higher US tariffs on EU goods, will have a moderate indirect impact on the Bulgarian economy, mainly through weaker demand from the EU, given Bulgaria's limited direct trade links with the US.
Inflation in Bulgaria is expected to rise due to wage growth, the restoration of the VAT rate and higher utility prices. Inflation will ease as wage growth slows, however. The OECD predicts that continued significant wage increases could slow the process of bringing inflation down in our country. While growth in pensions, public sector wages, social transfers and investment spending is strong, weaker-than-planned revenues may necessitate adjustments to spending in order to keep the budget deficit within EU limits. Moderate fiscal consolidation and a greater focus on growth-enhancing spending would help to reduce inflationary pressures and support economic growth, according to experts.
Domestic industrial production continued to contract in 2025, despite a slight improvement in September. According to the OECD, sentiment in the sector remains poor, with an increasing number of Bulgarian manufacturers reporting insufficient external demand.
The report also notes that Bulgaria's annual GDP growth reached 3.2% in the third quarter of 2025, according to a preliminary estimate. Private and public consumption remain key drivers of growth in Bulgaria, supported by rising real incomes (including public sector wages, particularly in the security and defence sectors), credit growth and social transfers.
Consumer confidence remains high, and retail sales continue to grow, albeit at a slower pace. According to the OECD, investment growth in the country has strengthened, with the implementation of EU projects gaining momentum following the formation of a new government.
Meanwhile, Bulgaria's unemployment rate fell to 3.4%, reflecting continued job creation against a backdrop of strong economic growth.
Annual inflation relative to the consumer price index reached 5.3% in October, driven by rising labour costs and strong demand supported by a tight labour market, the indexation of minimum wages and pensions, the restoration of VAT rates and higher utility prices.
The OECD recommends that reforms to optimize procedures for the development of renewable energy sources, access to the electricity transmission network, faster licensing and connectivity would accelerate the green transition and improve the business climate in Bulgaria.