Bulgaria: Macroeconomic Country Outlook
- According to GlobalData, Bulgaria’s economic growth is forecast to slow down to 3.2% in 2022 due to the impact of Ukraine crisis.
- Bulgaria was ranked 45th out of 136 nations in the GCRI Q1 2022.
- The country’s wholesale, retail, and hotel sector grew at a CAGR of 5.4% during 2017–21.
According to the Heritage Foundation, Index of Economic Freedom (2022), Bulgaria was considered the 29th freest economy among 184 nations, with a score of 71.0 out of 100. Moreover, its overall score is above the regional and world averages.
Key findings
- Bulgarian economy on recovery path: According to the National Statistical Institute, Bulgaria, the economy of the country expanded 4.5% annually in Q1 2022. However, the Ukraine conflict might complicate efforts to boost economic growth while addressing institutional weaknesses since the country relies on Russia for natural gas. In March 2022, the government announced to spend $617 million to buy grain in order to boost state reserves. According to GlobalData, the economy expanded by 4.2% in 2021 and is forecast to grow by 3.2% in 2022 and 4.5% in 2023.
- Bulgaria’s stance over Russia’s invasion of Ukraine and impact on the country: In March 2022, Bulgaria joined fellow members of the European Union in imposing economic sanctions on Russia. Moreover, the country also provided military helicopters and tanks to Ukraine and expelled Russian diplomats in the country. On April 28, 2022, Bulgarian Prime Minister, Kiril Petkov travelled to Kyiv to meet the Ukrainian president and provide military assistance to Ukraine. In May 2022, Bulgaria and Poland became the first European casualties of Russian gas sanctions. Bulgaria’s support to Ukraine might end the historically close ties between Bulgaria and Russia.
- World Bank’s Doing Business ranking in 2020: According to the World Bank, Doing Business Report (2020), Bulgaria was ranked 61st out of 190 countries. It takes 23 days to start a business in Bulgaria as compared to the Europe and Central Asia average of 11.9 days. The number of days taken to deal with construction permits in Bulgaria is 97 days as compared to 170.1 days in Europe and Central Asia. Bulgaria was ranked 21st in terms of trading across borders; 25th in terms of protecting minority investors; and 43rd in terms of dealing with construction permits, out of 190 countries.
- R&D sector of the country: According to the World Intellectual Property Organization, Global Innovation Index (2021), the country secured 35th position among 132 economies. The country stood at second position among the 34 upper middle-income group economies. In February 2022, Bulgarian optical device manufacturer, Optix inaugurated a research and development (R&D) and production center of $5.8 million in the country. The opening of new facility will add 100 employment opportunities. In April 2022, the Bulgarian government announced the launch of a new artificial intelligence (AI) and computer science research institute in Sofia with an investment of $100 million.
- Digital Bulgaria 2025 National Programme: In May 2021, the Ministry of Transport, Information Technology and Communication of Bulgaria approved the ‘Digital Bulgaria 2025 Programme’. The plan is based on three main objectives, which include (i) modernization of school and higher education in the field of ICT (ii) increasing the number of highly qualified specialists in the field of ICT (iii) improving the digital and ICT skills of workforce. Additionally, the project aims to modernize and increase the widespread implementation of intelligent information technology (IT) solutions in all areas of the economy and social life.
- National Development Programme Bulgaria 2030: In December 2020, the Council of Ministers adopted the ‘National Development Programme Bulgaria 2030’. The program plans to transform Bulgaria into a country with high standards of living and a competitive, low-carbon economy by 2030. The country is expected to develop and implement innovations in every sector of the economy, adapting to the transforming world through its highly educated, creative, supportive and healthy society. It will be a fertile ground for ideas and a magnet for investment and human capital. The three strategic goals of the program are: accelerated economic development, demographic upswing, and reduction in inequalities.
Key fundamentals
Sectoral outlook
- Positive outlook of tourism sector: In September 2021, Bulgaria and Egypt held a meeting to enhance cooperation between the two countries in the tourism and archaeological fields, in order to boost the tourist movement between Egypt and Bulgaria. In March 2022, Bulgaria and Libya announced a plan to enter into an agreement to develop tourism and health tourism between both the nations, which aims to ensure an increase in the flow of tourists to Bulgaria. On May 01, 2022, the country lifted all COVID-19 entry requirements for foreign visitors in the country in order to enhance the tourism sector. According to the National Statistical Institute (NSI), the total revenue from tourism grew by 53.7% annually in February 2022. The number of foreign tourists who visited Bulgaria rose by 70.1% annually in February 2022. According to GlobalData, international arrivals in the country expanded by 42.5% in 2021. Furthermore, international tourists are forecast to grow by 27.9% in 2022 and 51.8% in 2023.
- Bulgaria expected to witness improvement in R&D sector: In August 2021, US-based software engineering firm DataArt opened a new research and development center in Bulgaria. In February 2022, Bulgarian optical device manufacturer, Optix inaugurated a $5.8 million research and development (R&D) and production center. The opening of new center is expected to create job opportunities in the country. In March 2022, the Bulgarian government invested $100 million into the Institute for computer science, artificial intelligence and technology (INSAIT), which aims to boost the country’s credentials as a science and technology hub in central and eastern Europe. Additionally, Google, DeepMind, Amazon and SiteGround announced an additional $10.5 million investment, while Bulgarian entrepreneurs are expected to invest $600,000.
- Support for renewable energy sector in the country: In December 2021, the country announced to build seven gigawatts (GW) of renewable energy capacity and 1,750 MW of energy storage systems by 2030. In March 2022, the government announced to provide $35.5 million to solarize rooftops of all state hospitals. The Electricity System Operator announced to add 5.9 GW in the overall national power capacity by 2031, where 4.9 GW is expected to come from renewable sources. The new nuclear power plants would also be connected with transmission grid between 2032 and 2040. In May 2022, Thermal power plant (TPP) operator, ContourGlobal Maritsa East 3 signed a non-binding MoU with the Ministry of Energy Bulgaria in order to invest in new low-carbon or no-carbon technologies to support Bulgaria's energy transition. The MoU would be in force until the end of 2025.
GlobalData Country Risk Index (GCRI) – Q1 2022
Bulgaria was ranked 45th out of 136 nations in the GCRI Q1 2022. The country’s score is in the low-risk nations band (30–40). Bulgaria‘s overall risk score (38.3) is lower than the East Europe (39.4) and world average (43.5) in GCRI Q1 2022. The country’s score for macroeconomic risk (30.1), political environment (46.1), legal environment (47.3) and environment (25.4) is lower than east Europe and the World average.
GCRI Methodology
GlobalData’s unique Country Risk Model determines the existing and future level of country risk by assessing various qualitative and quantitative factors. The index is designed to help firms formulate their global business strategies based on historical developments in an economy.
The Country Risk Index incorporates the latest available macroeconomics, political, social, technological, environmental, and legal data from a range of recognized national and international statistical sources, and proprietary data from GlobalData. Eastern Europe countries in this publication include Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, Russia, Slovakia, Turkey, and Ukraine.
About the report
GlobalData Macroeconomic Outlook report is designed to provide detailed macro-economic analysis which will help clients in their business planning, investment and strategic decisions, and analysis. It also provides a quick view of the current situation and the risk score of the country in comparison to region and world based on the proprietary risk framework. The report also highlights key strengths, weaknesses, opportunities, and threats in each of the pillars of PESTLE, economic growth prospects, and key events which can impact the country’s future outlook.
More details: Macroeconomic Outlook Report: Bulgaria
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