Over 80% of Bulgarian businesses affected by high inflation, more than 56% by war in Ukraine - survey

Bulgarian small and medium-size enterprises (SMEs) are experiencing workforce shortage, but a large part of them managed to introduce innovations in 2022, shows a nationally representative survey carried out by the Bulgarian Small and Medium Enterprises Promotion Agency (BSMEPA).

Over 500 Bulgarian SMEs filled out the questionnaire in January 2023 and gave feedback on their development last year in the conditions of a series of infavourable factors, such as high inflation, the political situation in the country, the war in Ukraine, and the post-pandemic situation.

The collected data’s analysis shows that in 2022, the high inflation had the strongest negative impact on Bulgarian businesses: nearly 83% said they were affected by the price hike. Next were the political situation in Bulgaria, which affected 63.5% of companies, and the problems in the supply chains, which had a negative impact on 57.6% of companies.

The survey also shows that the assessments of SMEs’ owners about their business’ development regarding the portfolio of products and services offered, the sales registered, and their position on the Bulgarian market have not changed compared to 2021. Regarding their position on the international markets, 58.6% said their market share remained unchanged in 2022. Nevertheless, only 25.7% of SMEs registered an increase in their profit last year.

The survey shows that over 70% of SMEs introduced an innovation in 2022, which gives cause for optimism about their development. The higher share of innovations were product innovations (40.6%). This is closely related to the respondents’ opinion that the high quality of their products and services is their biggest competitive advantage. 

The biggest problems facing SMEs according to their owners are the lack of qualified workforce (55% of respondents), high energy prices, and high prices of raw materials. The problem with the workforce is expected to worse, given the growing demand for qualified personnel in all economic spheres, as well as the growing and newly appearing requirements for their skills, the BSMEPA  noted. 

SMEs need funding mostly in the field of technological modernization and export activity.

Despite the dynamic situation, 61.6% of SMS think that their business is heading in a positive direction and remain optimistic about its favourable development in 2023. 

The data from the survey will be included in the annual analysis on the state of SMEs in Bulgaria, which the BSMEPA traditionally makes and will soon present to the public.