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 recover but stay modest by emerging market standards. We forecast the economy to grow by 2.4% in 2016 and 2.6% in 2017.

  • 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 3.0% 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.

  • Bulgarian goods export will slow in the coming years as demand from key trading partners will weaken as a consequence of the Brexit referendum. Nevertheless, we expect services exports to perform strongly, as the county's tourism sector stands...

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's strong overall economic performance, boosted by our forecast for robust GDP growth, and high levels of trade openness elevate the country's trade and investment environment. However, the country's overall score is weighed down by its highly inefficient tax administration and bureaucratic systems, as well as its high levels of corruption, which have severely hindered private investment. Consequently, Bulgaria scores an average 59.8 out of 100 for Trade and Investment Risk, placing the country in 16th position out of 31 Emerging European...

Bulgaria Industry Coverage (20)


Bulgaria Autos

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BMI View: Strong wage growth, rising consumer confidence and an improving labour market in Bulgaria will translate into an expansion of 6.7% in vehicle sales in 2016.

Passenger Car AndLight Commercial Vehicle Sales
Passenger Car & Light Commercial Vehicle Sales (2014-2020)
f = BMI forecast. Source: ACEA, BMI

Key Views

  • Vehicle sales will grow 6.7% in 2016.

  • Improving consumer confidence, strong wage growth and...

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: Bulgaria's devices market will be subject to conflicting economic trends throughout the medium term, but the net impact will be positive. We forecast stronger market performance at a CAGR of 5.0% throughout 2016-2020. The key upside is from lev appreciation forecast for 2017-2020 that will boost purchasing power and compensate for the drag of a declining and aging population. Meanwhile, in terms of device trends, relatively low penetration rates and an aging stock means there is some volume growth potential. However, there is also downside, for instance in the negative impact of smartphones on tablet sales.

Latest Updates And...

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: An uptick in household spending growth will present growth opportunities for the food and drink industry over 2016. Per capita spending on food and non-alcoholic drinks will exceed headline growth, indicating consumer willingness to increase expenditure in the sector. However, an ageing and declining population will limit opportunities for food and drink companies in Bulgaria.

Food and 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 expect to see a mixed level of performance across Bulgaria's insurance industry over the next few years, with the less developed life market outpacing the relatively mature non-life sector in terms of premiums growth by a clear distance. The factors that have held back the development of the wider insurance market, including low household incomes and spending, will persist; however we expect demand for personal insurance products to be supported by a relatively robust macroeconomic backdrop and a strengthening local currency. Given that Bulgaria is already home to the majority of major European multinationals, merger and acquisition activity is likely to be limited. However, Euroins' recent purchase of Talanx's local subsidiary shows that there is potential for further consolidation as smaller...

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 is relatively underdeveloped for a country of its size and is considerably smaller than those of the other Central and Eastern European nations, including Romania and Poland. Mining activity in the country is currently focused on two core minerals, coal and copper. Both sub-sectors are heavily consolidated with one key company dominating production in both cases. Expansion in mining production will be relatively moderate over the forecast period to 2020 as, with the majority of mined production used for domestic usage, there is relatively little incentive to expand capacity. That said, the sector is better insulated against global headwinds, namely the ongoing contraction in global commodity prices, than those of larger countries.

Mining Sector Industry Value (2013-2020)

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: Bulgaria's expanding private healthcare market will provide significant revenue-earning opportunities for multinational pharmaceutical firms and medical device manufacturers. The poor state of the public healthcare system and the liberalisation of the private sector will see a rapid increase in private healthcare usage as the demand for more advanced and high-quality treatment rises. This trend is likely to be echoed across the Balkan region.

Headline Expenditure Projections

  • Pharmaceuticals: BGN2.71bn (USD1.54bn) in 2015 to BGN2.89bn (USD1.58bn) in 2016; +6.6% in local currency terms and +2.5% in US dollar terms. Forecast unchanged from last quarter.



Bulgaria Power

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BMI View: Our outlook for Bulgaria's power sector remains broadly unchanged this quarter. Limited investment in new power infrastructure means capacity and generation are expected to grow only slowly throughout the forecast period, leaving Bulgaria heavily reliant upon coal-fired power plants and ageing nuclear power plants. Despite the slow growth, Bulgaria will continue to posit an energy surplus and will continue to export electricity via several major cross-border interconnections. There is some scope for renewed investor interest should reforms to the wholesale electricity market gain traction, however corruption remains a significant barrier to new developments and limited domestic demand will also curtail growth potential.

Headline Power Forecasts (Bulgaria 2015-2021)

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: We maintain our core forecast for the Bulgarian telecommunications market and have not made significant revisions in this quarterly update. We retain our view that there will be very limited organic growth in mobile market subscription figures out to 2020. The market will witness growth in terms of 3G/4G uptake as data usage surges in the country and this trend is expected to continue throughout the course of our forecast period. Mobiltel 's recent acquisition of fixed services provider Blizoo will further boost the operator's competition with fixed services giant Vivacom . This will benefit...


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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