The Bulgarian economy and the great world economic powers (2021-2023)

The Bulgarian economy, like any economy of a small country, is directly dependent on the major world economic powers. For Bulgaria, these powers are the EU and the United States. Therefore, we will first briefly consider the BNB’s (BNB – Bulgarian National Bank) prognosis for external economic influence. And that means: the development of the European Union and the North American economic giant, for the period 2021-2023. The prognosis  is based on the assumption that widespread measures against the Covid-19 pandemic, which are restrictive of economic development, will gradually begin to fall away. The beginning of this trend should start happening in the second half of 2021.

Acceleration of vaccination campaigns in EU Member States, the US and the rest of the world should lead to the complete (or almost complete) abolition of measures in 2022. Such a development, together with the fiscal measures taken by the EU and the US, is expected lead to accelerated growth in world trade, as well as a global increase in gross domestic product. Trade and the services sector are expected to begin to recover in the second half of 2021. This will lead to more serious external demand for Bulgarian products, goods and services. This prognosis is based on data from the prognosis report of the European Central Bank on the macroeconomic indicators of the European Union for the period 2021-2023.

According to the same prognosis, the activation of the Mechanism for Recovery and Resilience will lead to the strengthening of European economies. The expectations for the North American economic giant are similar. In March, the US Congress passed a package of fiscal stimulus worth nearly $ 2 billion (American Rescue Plan). Two additional plans for the recovery of the US economy have been launched, which will be triggered with more serious dynamics in the second half of 2021.

Recovery plans and measures taken to support business in a global pandemic, determine the achievement of the following expected results.

Growth of the foreign trade demand for Bulgarian goods and services for the period 2021-2023

2021: 9%

2022: 6%

2023: 3.7%

The jump in prices during this period of all products (energy and non-energy) will continue. The reasons for this are diverse, but we can single out a few as the main ones. The recovery of global economic activity is the first. This recovery is also expected to lead to a more massive demand for raw materials. Difficulties in global supply chains (related to pandemic control measures) and the lack of certain raw materials will also raise prices.


Bulgarian Economy Development for the Period 2021-2023 (Macroeconomic Indicators According to BNB Forecast Data)

Despite the ongoing Covid-19 pandemic, Bulgaria managed to increase GDP by 2.5% (chain base) in the first quarter of 2021. All important indicators report this positive trend in the second quarter of the year.

And if the trend continues, the country’s GDP for 2021 will grow by 4.1%. Which will grow to 4.6% in 2022. And for 2023: growth of 3.5% of GDP.

All projected results are based on a relatively favorable development of the situation with the cessation of the spread of the Covid-19 pandemic and the lifting of restrictive measures. With such a development, in 2022 Bulgaria will return to the average annual economic indicators from before the pandemic. During the period 2021-2023, the country’s GDP will largely reflect the movement of EU funds to Bulgaria on projects related to the Mechanism for Recovery and Resilience, and their successful implementation. The same applies to changes in exports. Bulgaria is expected to receive BGN 12.6 billion. to implement its National Recovery and Resilience Plan (NRRP) for the period 2021-2026. These are EU grants. Adding private investments, the total amount can reach: BGN 15-15.5 billion.

National Recovery and Resilience Plan (NRRP) with EU grant

EU money under the NRRP will come mainly in the form of fixed capital investments in the general government sector. Direct cash flows to the private sector (capital and current transfers) will be less.

NRRP investments are expected to occur at a steady pace. The most serious jump in investments from the EU to Bulgaria and then from the general government sector to business is expected in 2022.

Bulgaria’s GDP for 2021 will depend on the increase in domestic demand and the transition from negative to positive net exports. Data on private consumption show a 3.5% increase for 2021. Government consumption will grow by 5.6%. Fixed capital investment – about 1% growth. The prediction is based on wage growth and an increase in consumption due to the removal of restrictive measures related to the pandemic by the end of the year.

Private investment

After the significant decline in investment in the country in 2020, in 2021 private investment will contribute the most to the stabilization of this sector of the Bulgarian economy. Reducing insecurity (vaccination and lifting pandemic measures) will be key. Another important factor will be the increase in demand for Bulgarian goods and services abroad. Credit growth for the non-financial sector is also expected.

Net exports and exports of services will increasingly contribute to the positive growth of the Bulgarian economy. A second very important factor in the second half of the year will be the restoration of transport services and the traditionally strong Bulgarian tourism. For 2021, the recovery in the tourism sector will be minimal. However, visits by foreigners to Bulgaria for purposes other than excursions or holidays are expected to increase significantly. These are all types of business trips, trips related to attending conferences, festivals, sporting events, etc. Bulgaria offers excellent conditions for both summer and winter tourism, as well as for organizing all kinds of business and sporting events.


According to the BNB, 2022 will be the year with the highest economic growth – 4.6% – of the projected 3. Both increased domestic demand and increased exports will contribute to this. According to the BNB, in 2022 some of the fiscal Covid-19 measures will be terminated. This will reduce healthcare costs. At the same time, the share of total investment will increase, thanks to projects related to the NRRP. EU funds are also expected for the final phase of the 2014-2020 programming period. There will be national funding for ongoing infrastructure projects. The significantly larger number of foreigners expected to visit Bulgaria in 2022 and the larger share of net exports will be the basis of the increased GDP.


The BNB prognosis for the growth of Bulgaria’s gross domestic product in 2023 is within 3.5%. According to Bank №1, in the last projection year we expect a negative contribution of net exports and increased imports due to higher domestic demand. All elements of domestic demand will grow. The contribution of private consumption will be the highest. As well as fixed capital investments – such as the expected purchase of new aircraft for the Air Force, and the dynamic implementation of NRRP projects. 2023 is the last year of the EU programming period 2014-2020 and a decline in government investment is expected.


Bulgaria 2021-2023: employment, loans and inflation

With the increase in the number of vaccinated people in the country and the easing of measures against Covid-19, a gradual increase in the number of employees is expected. The labor market will be affected by the normalization of world markets, as well as the improvement of the economic situation in Bulgaria as a whole during the prediction period.

In 2022, the number of employees will increase by just over 1%. The trend towards a steady increase in this percentage will continue in 2023, but will not reach the levels of 2019.

Inflation in the country will continue to rise and by the end of 2021 will reach 3.5%. This will lead to a jump in the prices of energy sources, and hence at all other prices. Including all types of food, household services, non-food items, etc.

According to the BNB, in 2022 a significant slowdown in inflation to below 1% is possible. But this will happen if the assumptions of falling prices in euros on the price of oil become a reality.

For 2023, the projected inflation will again be in the range of 1-1.1%.

Loans in the private sector are expected to grow by 5.9% by the end of 2021, on an annual basis (by the end of 2020 this value was 4.5%). The trend of increasing loans in the private sector will continue until the end of 2023. This dynamic is determined by the end of the moratorium on payments on bank loans and increasing domestic demand. Usually, the good real estate market in Bulgaria and the relatively low interest rates of banks will also contribute to the jump in the percentage of business loans.

Fiscal and economic measures to support and recover Bulgarian economy from the effects of the global Covid-19 pandemic (such as the Recovery Program) are expected to give additional positive impetus to business and loan applications.

According to the BNB projection, bank deposits will continue growing at a serious pace. The reasons for this will be the positive changes in the labor market and the increase in wages. By 2023, this trend will slow down a bit.

Investment in Bulgarian economy? Now?

One business maxim claims that any crisis is an open opportunity. Before the pandemic, Bulgaria was among the most economically stable countries in the EU. Every year it recorded a steady growth of all major macroeconomic indicators. Thanks to the timely economic measures of both the EU and the Bulgarian government, the country is relatively well absorbing the economic blow inflicted by the global pandemic. As can be seen from the prediction results of the Bulgarian National Bank, the country is already in the process of recovery. The very well-developed real estate market, the well-organized tourism sector and the only remaining in the EU Citizenship by Investment Program a.k.a. Golden Passport – are among the best investment opportunities in Bulgaria. And why not do 2 in 1: investment and obtaining of Bulgarian (EU) citizenship? It is quite possible with the Bulgarian CIP. And after the changes in March 2021 adopted by the Bulgarian Parliament, the Bulgarian CIP is better than ever.

For even more accurate risk assessment, legal or business advice, experts are at your disposal. is part of the international law firm VD&A with offices in Sofia, Hong Kong, Dubai, USA and others.

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