Bulgaria underwent significant transformation after the fall of the Soviet Union over three decades ago. Since then, the country has changed from a centralized, planned economy to an open, market-based, middle-income economy anchored in the European Union and NATO. The advancement of structural reforms, starting in the late 1990s, and the introduction of the currency board spurred improved living standards. As one of the EU’s newer members, Bulgaria is an emerging market offering opportunities for U.S. companies.
Bulgaria has been on a positive economic path although the Ukraine war and elevated inflation continue to pose risks for robust growth, with Bulgaria reporting one of the highest inflation rates within the EU during 2022. In 2022, Bulgaria’s economy grew 3.4% which was higher than initially predicted. Growth is projected to slow to 1.9% in 2023 due to global economic headwinds, including the slowdown in Bulgaria’s main trading partners, but then rebound to 3.2% in 2024.
The total U.S.-Bulgaria bilateral trade in goods in 2022 continued its upward trajectory, to USD 2.0 billion, a 33% increase from the prior year.
However, downward macroeconomic pressures include the Ukraine war, a declining population, and a tight labor market. Bulgaria has held five parliamentary elections since April 2021. A new coalition government came into office in June 2023, but the political situation continues to be fragile.
A potential recovery could be driven by higher wages, EU-post-COVID recovery grant funds, and export increases. Bulgaria expects to receive up to EUR 6.2 billion (currently USD 6.7) over a six-year period (2021-2026) from the EU’s post-COVID recovery grant funds through the National Recovery and Resilience Plan to improve its economy in areas including green energy, digitalization, and private-sector development.
The government seeks to adopt the euro, but the timeframe for doing so remains uncertain. Bulgaria joined the European Exchange Rate Mechanism (ERM II) in July 2020 and the EU’s Banking Union in October 2020. Bulgaria’s entry into the Eurozone will depend on whether the government is able to curb inflation and adopt the necessary legislative amendments. The adoption of the euro will mitigate currency risk and help reduce transaction costs with some of the country’s key European trading partners.
This report will identify some challenges and then highlight the leading sectors for U.S. companies, which include agriculture and agricultural equipment, energy, environmental technologies, healthcare, IT, tourism, and safety & security.
Political & Economic Environment: See State Department’s website for background on the country’s political environment.