Bulgaria: Return To Growth | Global Finance Magazine

In recent years, the economy has refocused towards electronics, information technology, sustainable energy and health sciences, all areas where IED has flowed. The Trakia economic area in the Bulgarian Center-South is now the largest industrial development in southeast Europe, attracting 3 billion euros (around $ 3.24 billion) in ABB, Schneider Electric, Ferrero, Osram and Kaufland.

Before the 2008 financial crisis, Cracan notes that “manufacturing, tourism and construction attracted large -scale IED. But in recent years, it has changed, with electronics, software development and outsourcing and automotive parts now the main recipients. ” Companies in the Netherlands, Austria and Greece have directed investment costs.

In the economy in the broad sense, large -scale investments in infrastructure and other key areas, which was funded by the EU, which reduced by 16.3 billion euros in Bulgaria since its accession in 2007 – and a stable and proactive financial sector stimulated modernization. All of this made the country more attractive for Western companies and banks.

Attached to the reform

And 2025, so far, seems encouraging. On January 1, Bulgaria joined the EU Schengen area, which guarantees the free movement of people in 29 countries. Against expectations, a minority coalition government has been formed this month, announcing a possible end to almost four years of political quarrels that have hampered the reforms and endangered an essential absorption of EU funds.

Although he understands a pro -Russian party, the new government says that it is committed to measures that include public procurement reform, reduction of bureaucracy and corruption, and – in petrol – by doing everything necessary to unlock recovery and resilience of the EU (RRF), some of which will disappear forever unless they are used this year.

“Bulgaria should earn 5.7 billion euros in subsidies – money that does not need to be reimbursed and which represents around 6% of GDP, provided that it undertakes structural reforms to unlock it,” explains Cracan, which notes that Bulgaria is lagging behind for all other countries in central and eastern Europe in the absorption of RRF funds.

In the updating of its national strategy for Bulgaria, the BERD highlights three priorities: improving the competitiveness of the private sector, including small and medium -sized enterprises and further stimulating the attraction of Bulgaria as the target of the IED; Stimulate the resilience of the financial system to make it more flexible and capable of absorbing EU funds; And support the green transition by stimulating the use of renewable energies, increasing energy efficiency and improving long -term energy safety.

The BERD has already invested nearly 4.8 billion euros in more than 307 projects in Bulgaria and strategy figures, combined with promised government reforms, allowing more investments in the future.

The green transition received a boost in February when the government unveiled its governance Porgram 2025-2029. Prepared with the help and support of international financial institutions and the World Bank, the plan includes a sustainable energy development strategy and plans to undertake enormous investments in infrastructure, in particular new hydroelectric and nuclear units.

Coal currently represents half of the energy produced in Bulgaria. Existing efforts to reduce this dependence include investments in solar energy, which should increase the capacity of 1 GW to 3 GSW in the coming years. Other investments in the wind and hydroelectricity are expected.

Renewable energies investors include Austria Enery, which acquired the Karadzhalovo solar park from 174 MW in Plovdiv five years ago; and the ground floor of the Czech Republic, which works on St. George, a solar project of 165 hectares and 229 MW near the Romanian border.

IED entries are late

So what does the future look like? Fitch Ratings gives Bulgaria a positive perspective of BBB, which, according to Malgorzata Krzywicka, director of sovereign notes, is based on the planned membership of the country area on January 1, 2026.

“The country has a good external and public assessment”, she notes, “with the general levels of the lowest government debt of the EU after EU, while the currency commission – in the situation since 1997 – has also been important, contributing to creating a very” euroid “economy.” But the jury has always been released, she adds, on the question of whether the good news will continue to come. Significant institutional and structural reforms are vital.

“To date, the structural reforms have been more careful and weaker than those implemented by the neighbors of Bulgaria,” said Krzywicka, “while wages and costs have increased.

IED entries dropped last year. According to the Bulgarian Central Bank, foreign investments dropped by almost 55% against 2023, to 1.49 billion euros, which is equivalent to only 1.5% of GDP against 3.5% in 2023.

Political instability – and a feeling of drift in economic policy – do not play a role on this subject, and the problems of governance have also not helped. Bulgaria is lagging behind by its neighbors, Romania and Hungary, in the perception of corruption, notes Krzywicka.

The EU fund absorption rate is a FIT Fitness bell tower; And in this, she contrasts the record of Bulgaria with Croatia.

“That [Croatia] The highest absorption rate of funds within the framework of the economic program of the national recovery plan under way is due to the strong government commitment to the reform agenda, “she said.” Improvement of institutional capacity guarantees that funds are future and are used in an efficient and transparent manner. »»

Investors are also looking for a reform before bringing their toes back to Bulgaria, but their contribution is crucial if Bulgaria is to fill the convergence gap with other EU countries.