Our comprehensive assessment of Bulgaria's operating environment and the outlook for its leading sectors are formed by bringing together a wealth of data on global markets that affect Bulgaria, as well as the latest industry developments that could impact Bulgaria's industries. This unique integrated approach has given us an impeccable track-record for predicting important shifts in the markets, ensuring you’re aware of the latest market opportunities and risks in Bulgaria before your competitors.

Country Risk

Bulgaria Country Risk

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Core Views:

  • Bulgaria's GDP growth in the coming years will stay modest and amount to 1.5% in 2015 and 1.7% in 2016.

  • Private consumption will continue to be the main economic growth driver, as Bulgaria remains unable to attract foreign investment, which has bolstered GDP-growth in the past.

  • We are forecasting Bulgaria's budget deficit to remain under 3% of GDP in the years ahead and although the overall debt level will rise, it will stay at a low level compared to regional peers.

  • Bulgaria will generate a trade surplus in the coming years due to higher eurozone demand and a growing influx of international tourists.

  • By 2016 Bulgaria's price levels will start growing again, after experiencing the deepest deflationary period (after Greece and Cyprus) in...

Bulgaria Operational Risk Coverage (9)

Bulgaria Operational Risk

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Bulgaria presents a stable security environment for investors with limited risks of violent activity. The country has peaceful relations with its neighbours and its EU and NATO memberships mitigate any risks of interstate conflict. While there the country serves as a transit point for Islamist militants entering Europe, they have not undertaken any attacks in Bulgaria. The most significant risks for investors stem from the presence of organised crime which exposes businesses to fraud and corrupt practices. Bulgaria receives a score of 62.2 out of 100 for Crime and Security Risk, ranking it 11th out of 31 states in the region.

Organised Crime Drives Up Security Risks
Bulgaria & Regional Average Crime & Security Risks

Bulgaria Crime & Security

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Bulgaria is a generally safe place for foreign business travellers, expatriates, and tourists. Although Bulgaria's overall Crime and Security Risks score is undermined by the large presence of organised criminal groups, these do not for the most part threaten foreign visitors. The greatest danger faced by foreigners in terms of crime is ATM/card fraud, and pick-pocketing and theft. Violent crime is unlikely to affect foreigners. Cyber criminal activities are rising up the public security agenda, with Bulgaria having emerged as the world's fourth-biggest source of data breaches. Bulgaria's Security Risk score is 68.9.

Bulgaria faces a modest risk of terrorism. The bombing of an Israeli tourist bus in 2012 appears to have been an exception rather than marking the start of a new terror campaign. Nevertheless, we believe Bulgaria could be an attractive target to international Islamist terrorist groups, owing to Sofia's staunchly pro-US foreign...

Bulgaria Labour Market

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Bulgaria's entrance into the EU in 2007 has enhanced the country's Labour Market prospects, leading the country to adopt wide-ranging legislation that will have long-term benefits for gender equality, access to education and movement of labour. The relatively small size of the population is an impediment for investors, as the labour pool is fairly small and continues to shrink. Bulgaria's overall Labour Market Risk score of 56.9 out of 100 is above the regional average of 55.8 and the global average of 48.8. Its rank of 14 th out of 30 countries in Emerging Europe demonstrates that although it is an above average investment destination, there are still a number of hurdles for businesses operating in the country.

The most important of these hurdles is the demographic crisis in Bulgaria, which is resulting in an unfavourable long-term decline in the population, as well as a rise in the average age. Partly due to emigration,...

Bulgaria Logistics

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BMI View: Bulgaria's logistics network offers generally widespread coverage, with electricity, internet services and water available across the country. Fuel prices have fallen, which reduces costs for businesses but does little to encourage investment in the country's domestic production. The country's high levels of corruption and red tape lead to heightened operational costs for investors. Although Bulgaria's roads, railways and inland waterways provide some diversification in freight transport options, the country's all transport sectors suffer from delays owing to inadequate infrastructure, owing to Bulgaria's poor quality road and rail. These factors are reflected in Bulgaria's overall score in the BMI Logistics Risk Index, which at 60....

Bulgaria Trade & Investment

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BMI View: Bulgaria faces some of the highest trade and investment risks in the EU despite its relatively open economy and harmonization of EU regulations. The major risks to trade are posed by lack of contract enforceability and systemic corruption. However, the government offers attractive financial incentives to certain industries. In addition, high rates of foreign direct investment (FDI) help to partially mitigate these risks, and encourage further investment. Bulgaria's average performance across the three pillars in the Trade And Investment Risk Index is underlined by its overall score of 59.4 out of 100, placing it 14th regionally, between Slovenia and Kazakhstan, and 60th out of 201 countries worldwide.


Bulgaria Industry Coverage (20)


Bulgaria Autos

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BMI View: Vehicle sales will pick up just slightly in 2016 after a weak 2015, reflecting the country's wider macroeconomic conditions. Protracted delays in resolving a banking crisis that began in 2014 will further weigh on credit conditions, undermining the growth of new car sales.

Passenger Car And Light Commercial Vehicle Sales
f = BMI forecast. Source: ACEA, BMI


Commercial Banking

Bulgaria Commercial Banking

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Commercial Banking Sector Indicators
Date Total assets Client loans Bond portfolio Other Liabilities and capital Capital Client deposits

Consumer Electronics

Bulgaria Consumer Electronics

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BMI View: We have left our core outlook unchanged for the Bulgarian consumer electronics market in our Q2 2016 report update. Lev depreciation against the US dollar hit consumer electronics demand in Bulgaria hard in 2015 through the erosion of household purchasing power and therefore reduce the affordability of imported hardware. We expect a recovery in 2016, albeit a limited one with growth of 1.6% forecast for the market as a whole, but with all three segments returning to growth. There will however be stronger growth over the medium term as economic conditions become more favourable, which will have a considerable impact on PC and AV sales that were hit hardest by lev depreciation. Low...

Defence & Security

Bulgaria Defence & Security

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On 18th August 2014 it was reported that Bulgaria's main political parties had agreed to increase the share of the country's defence budget which is spent on equipment by up to 20 percent. Bulgaria has come under considerable pressure in recent years to enhance and modernise its materiel. In particular, the North Atlantic Treaty Organisation is encouraging Bulgaria to invest in advanced equipment which can correspondingly reduce the manpower size of the country's armed forces.

On average, the Bulgarian armed forces have maintained a numerical size of 78,200 personnel between 2001 and 2011 across all three services. The size of the armed forces has declined from circa 111,300 in 2001 to 47,300 in 2011. The size of the armed forces is expected to contract still further with up to 1,300 civilian and military personnel being laid off by the end of 2014.

On 18th August 2014, Bulgarian defence minister Yelizar Shalamanov...

Food & Drink

Bulgaria Food & Drink

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BMI View: A rising propensity for consumers to spend should translate into a moderately improved outlook for food and drink manufacturers as well as retailers, particularly given how challenging the environment has been since the global financial crisis in 2008. The export sector will continue to benefit from a cyclical upswing in the EU, and private consumption will be the driving factor behind stronger economic growth. In addition, improving internal and external economic factors mean we have revised Bulgaria's GDP growth upwards for 2016 and 2017.

Food & Drink Spending

Freight Transport

Bulgaria Freight Transport

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All three freight sectors will continue to see positive growth over the medium to long term in Bulgaria, with the road sector faring particularly well out of the three, reaching 5.5% growth by 2020. EU funding will help to ensure the development of the country's infrastructure whilst the government's efforts to modernise the rail network should add strength to its transport offering. Bulgaria will be well-placed to capitalise on the growth in trade that looks set to take off by 2017 and continue to rise at least until 2020.

Bulgaria has demonstrated its strength through the European economic crisis and growth in GDP looks set to improve with recovery promising to be widespread. Supported by EU structural and investment funds between now and 2020, the country is working towards implementing its national reforms, with the freight sector likely to benefit from the expansion and improvement of the country's current...

Information Technology

Bulgaria Information Technology

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BMI View: After several years of anaemic growth, or even contraction, the Bulgarian IT market is forecast to move onto a faster growth trajectory from 2015 as the economic environment strengthens.   The Bulgarian IT market is one of the least developed in Europe, with relatively low penetration of hardware among consumers and enterprises, which we believe will result in a period of faster catch-up growth once confidence levels recover. For instance, the low PC penetration rate means there is potential for vendors to tap into demand from first-time buyers and upgrades/replacements - in contrast to more developed markets. Other areas of the market where we expect strong growth include cloud services,...


Bulgaria Infrastructure

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BMI View: Bulgaria's construction industry will grow by 0.3% y-o-y and 1.4% y-o-y in 2015 and 2016, respectively, supported by the transport infrastructure sector, particularly projects in the road and railway subsectors. Although Bulgaria will continue to be highly dependent on EU funding for infrastructure development, we have started to note increased international interest in this market.

Latest Updates And Structural Trends

  • Driven by transport infrastructure projects, we forecast Bulgaria's construction industry will grow by an average of 2.0% over 2015-2024. However, infrastructure projects...


Bulgaria Insurance

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BMI View: We hold a modest outlook for the Bulgarian insurance industry as a whole. The life insurance sector is poised to grow faster than the non-life sector. Nevertheless, the overall size of the life sector combined with low household disposable income and a general lack of understanding of life insurance policies and their benefits is a serious constraint on the life insurance subsector outlook. Non-life insurance accounts for just under 80% of the premiums of the insurance industry with the motor vehicle sector having the lion's share of the non-life market. We believe growth will be slow but will track upwards in both sectors and all non-life lines over the course of our forecast period. Nevertheless, we retain our view that a sluggish economy coupled with low household spending powers will constrain the growth of the insurance industry over the course of our...

Medical Devices

Bulgaria Medical Devices

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BMI View : Bulgaria represents one of the smallest medical device markets in the EU, contracting in US dollar terms in 2016. The market is largely reliant upon imports which are primarily sourced from other EU member states. Market growth will be dependent upon increasing healthcare funding and the success of efforts to develop the private sector.

Projected Medical Device Market, 2014-2019
Total (USDmn) Per Capita (USD) Total (Local Currency mn) Per Capita (Local Currency)


Bulgaria Mining

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BMI View : Bulgaria's mining sector will remain a relatively small mineral producer in Eastern Europe focused primarily on supplying domestic industry. We forecast stagnation and then declining production growth over the next five years. The country's main mineral commodities are coal and copper, with additional production of zinc, lead and gold.

We forecast Bulgaria's mining industry value to grow at an annual average rate of 0.4% from 2014 levels, reaching USD1.1bn in 2019, due to our expectations for weakening metals prices and little production growth. That said, modest interest in copper and...

Oil & Gas

Bulgaria Oil & Gas

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BMI View: Improvements in the refining sector are boosting the downstream outlook, though 2016 will be tougher with margins expected to drop. The restart of exploration in the Black Sea is positive for Bulgaria's oil and gas sector, which has suffered from heavy production declines in 2015.

Headline Forecasts (Bulgaria 2013-2019)
2013 2014e 2015f 2016f 2017f...


Bulgaria Petrochemicals

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The Bulgarian petrochemicals industry is set to remain small and uncompetitive over the next five years with little foreign interest in investing in a high-risk business environment. While polymer production has been boosted by the decline in naphtha prices, the fertiliser sector remains vulnerable to supply-side shocks in the form of gas feedstock restrictions from Russia. As such, growth in petrochemicals consumption is likely to be increasingly served by imports.

Bulgarian petrochemicals output enjoyed a surge in 2014 as the country's economy continued its steady albeit slow recovery. The index for rubber and plastic output grew by an average of 4.6% y-o-y in the January-August period of 2014, while chemicals output grew 8.0% y-o-y. This compares favourably with overall manufacturing growth of 4.0%.

In 2015, Bulgaria's petrochemicals capacities remained unchanged with olefins capacities of 300,000...

Pharmaceuticals & Healthcare

Bulgaria Pharmaceuticals & Healthcare

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BMI View: Pharmaceutical companies in Bulgaria will face increased pricing pressures from the National Health Insurance Fund (NHIF) as it unveils more cost-containment measures to rein in pharmaceutical expenditure. The NHIF will increasingly leverage its purchasing power to negotiate with drugmakers, and this dynamic will moderate the growth outlook for the country's pharmaceutical sector.

Headline Expenditure Projections

  • Pharmaceuticals: BGN2.53bn (USD1.72bn) in 2014 to BGN2.71bn (USD1.52bn) in 2015; -7.0% in local currency terms and -11.5% in US dollar terms. Forecast unchanged compared to the previous quarter.

  • Healthcare: BGN6.10bn (USD4.14bn) in 2014 to BGN6.32bn (USD3.55bn)...


Bulgaria Power

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BMI View: The Bulgarian business environment remains challenging, as it suffers from high levels of corruption and inefficiency. The conventional power sector will see little growth over the next decade and the renewables sectors will also witness a large slowdown due to the removal of preferential pricing and incentives for new renewables projects.

Main Trends And Developments:

  • Growth in Bulgaria's energy and utilities sector has been subdued due to fiscal constraints and consistent foreign competition.

  • We do not expect investment in renewable energy infrastructure to increase in the coming years, given that the Bulgarian government decided to terminate incentives for new renewable energy capacity in March 2015....

Real Estate

Bulgaria Real Estate

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BMI View: We expect occupier demand and rental values to improve in all three sub-markets of the commercial real estate sector that we cover, in line with economic growth. New development is taking place in the office sub-sector, which should increase the amount of new supply and offer greater investment grade assets to investors .

We forecast steady economic growth over the next five years, and se GDP rising by an average rate of 2.0% between 2015 and 2020, driven by robust growth in private consumption, rising consumer spending and improvements in trade.

The office market in Sofia and the key second-tier cities of Varna and Bourgas remains active in terms of leasing....


Bulgaria Retail

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BMI View: As demand for skilled workers in Bulgaria outpaces supply, wages will continue to rise over the next five years. With substantial levels of urbanisation and ever improving transport networks locally and internationally Bulgaria has an easily accessible and increasingly affluent consumer target market. However country rewards remain poor and the continued decline of the population size presents risk for retailers.

Opportunities for retail growth will be limited in the medium term to 2019. A lack of impetus to continue with political and economic reforms will dampen investors' enthusiasm, and economic growth is forecast to be sluggish, at 1.0% this year, not rising above 2.0% until after the end of our forecast period. Bulgaria's shaky financial system is under strain as a result of exposure to Greek banks as well as past bankruptcies, including the default by...


Bulgaria Shipping

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BMI View: In 2016 the port of Varna is set to see tonnage growth of 2.8% y-o-y, a fairly significant fall on the forecast 14.0% gain of 2015. The key reason for this is the sluggish performance of the economy, which will continue to grow below pre-crisis historical averages. Private consumption will continue to be the strongest growth component in the economy, but we forecast small expansions in this indicator, of only 1.4% in 2016 and 1.6% in 2017, tempering our shipping forecasts.

The business environment remains challenging, with high levels of corruption and inefficiency. Significantly for the shipping industry, lower oil prices are reducing the incentive to invest in domestic production as import costs fall, thus hampering export-led shipping.

Over our medium-term forecast period (2017-2019) we...


Bulgaria Telecommunications

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BMI View: Mobiltel 's acquisition of Blizoo further boosts the competition between Mobitel and incumbent Vivacom . This will benefit consumers with the introduction of a wider range of services over faster networks. Third player Telenor will have to become more dynamic. We see no real opportunities for the new fourth mobile network operator, Max Telecom .

3G/4G Drives Mobile Market Expansion
Bulgaria Mobile Market Forecasts


Bulgaria Tourism

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BMI View: Bulgaria is a well-established year-round tourism destination, with winter skiing and summer beach holidays popular among European holidaymakers. The short-break segment is also growing, both in the capital Sofia and in second cities such as Varna and Veliko Tarnovo. While the hotel sector is relatively well developed, significant opportunities for new entrants remain, particularly in the high-end and luxury travel sector. Investment in the country's transport infrastructure is needed...

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