Bulgaria Among EU Growth Leaders at 3.1%

Bulgaria’s economy has recorded growth of 3.1 percent, placing the country among the strongest performers within the European Union, according to data presented in the Annual Report for 2025 by the Council for Economic Analysis at a meeting of the Council of Ministers.

The report notes that inflation has accelerated moderately to 3.5 percent, while the current account deficit has widened to 5.9 percent of GDP. It highlights that although headline growth remains solid, structural imbalances continue to shape the economic outlook.

According to the analysis, economic expansion is largely driven by domestic consumption, while investment activity remains weak and exports contribute negatively. The report warns that sluggish productivity growth and limited capital accumulation raise questions about the long-term sustainability of convergence with the EU average.

The labor market remains characterized by low unemployment, but demographic decline is reducing the available workforce. This is putting upward pressure on wages and overall labor costs, creating additional challenges for employers.

Inflation trends are described as moderately rising, with risks of further increases linked to strong internal demand and external geopolitical and economic factors. At the same time, the external position of the economy is weakening, with the widening trade deficit identified as the main driver of the current account deterioration.

Fiscal policy is assessed as pro-cyclical and inflationary, with the budget deficit reaching 3 percent of GDP despite relatively favorable economic conditions. The report suggests that this combination of factors may increase medium-term vulnerabilities despite positive short-term indicators.

A separate focus is placed on wage growth, with analysts cautioning against interpreting nominal increases in isolation due to the impact of inflation. Instead, they assess wages as a share of gross value added, which incorporates productivity effects. This indicator has risen from around 55 percent in 2000 to about 67 percent in 2024.

The shift is attributed mainly to structural changes in the economy, particularly the expanding role of services such as trade, hospitality, education, and healthcare. Sectoral trends show relatively stable labor shares in industry, strong growth in information technology, and a decline in financial services, partly linked to digitalization and higher profitability.

The report concludes that rising wages are a natural part of economic convergence, but stresses that their sustainability depends on stronger productivity growth, increased investment, and fiscal adjustments that account for higher labor costs, especially in the services sector. The findings are set to be presented at the Council’s annual conference on June 22–23 at Sofia University “St. Kliment Ohridski.”