Vienna Institute raises Bulgaria's growth outlook through 2028
Baku, July 2, AZERTAC
The Vienna Institute for International Economic Studies (wiiw) expects stronger growth in Bulgaria's economy in 2026 and the following two years than it projected in its spring forecast published at the end of April, the Bulgarian News Agency (BTA) reported. This is according to the institute's latest summer economic outlook for the countries of Central, Eastern, and Southeastern Europe, published Wednesday on its official website.
Following a GDP growth of 3.1% in 2025, the institute forecasts that Bulgaria's economy will grow by 2.5% in 2026, an improvement over its spring forecast issued at the end of April, which had projected growth of 2.0%.
Growth is expected to accelerate to 2.6% in 2027 and 2.8% in 2028. Both forecasts have been revised upward from the previous projections of 2.2% and 2.4%, respectively.
Regarding public finances, wiiw expects Bulgaria's budget deficit to narrow from 3.5% of GDP in 2025 to 3.0% in 2026, remaining at that level through 2027 and 2028. This is a considerably more favorable assessment than the spring forecast, which had anticipated the deficit rising to 4.2% of GDP in 2027.
According to the Austrian institute, inflation in Bulgaria will reach 5.2% in 2026, before easing to 3.5% in 2027 and 3.0% in 2028.
The institute also forecasts a slight increase in unemployment, from 3.5% in 2025 to 3.6% in 2026, and 3.7% in both 2027 and 2028.
For the countries of Central, Eastern, and Southeastern Europe as a whole, the Vienna Institute expects economic growth to remain resilient despite the energy price shock caused by the war in the Middle East, which is expected to push inflation higher.
According to the analysis, although energy prices are expected to remain above their pre-war levels with Iran, the institute does not anticipate a repeat of the large-scale inflationary shock that followed Russia's invasion of Ukraine.
For the eastern member states of the European Union, the institute forecasts average economic growth of 2.2% in 2026, representing an upward revision of 0.1 percentage points compared with the spring forecast. Growth is expected to accelerate to 2.4% in 2027 and 2.7% in 2028.
"This outlook depends on the conflict with Iran not escalating again, the Strait of Hormuz remaining open, and energy markets returning to normal," said Richard Grieveson, wiiw Deputy Director and lead author of the summer forecast, as quoted in the report.
According to the analysis, the countries of Central and Eastern Europe continue to face structural challenges, including weakening industrial competitiveness, increasing competition from China, and declining foreign direct investment.
"Growth in Central and Eastern Europe has been driven primarily by private consumption, which has performed very strongly thanks to robust real wage growth in recent years, although the pace is now slowing," Grieveson explained.
Additional support is coming from European Union funding and investment in the defense industry. At the same time, the region's manufacturing sector, which is closely tied to the German economy, continues to struggle because of weak German industrial output and Germany's own structural challenges, he added.
The forecast covers the economies of 23 countries in Central, Eastern, and Southeastern Europe: Albania, Belarus, Bosnia and Herzegovina, Bulgaria, Croatia, the Czech Republic, Estonia, Hungary, Kazakhstan, Kosovo, Latvia, Lithuania, Moldova, Montenegro, North Macedonia, Poland, Romania, Russia, Serbia, Slovakia, Slovenia, Turkiye, and Ukraine.
Other news in this section
