Bulgaria: Return to growth International Finance Magazine – Haris Edu

In recent years, the economy has re -concentrated on electronics, information technology, sustainable energy and health life sciences, and all areas where foreign direct investment flows. The Economic Zone in Trakia in southern Central Bulgaria is now the largest industrial development in southeast Europe, as it attracted about 3 billion euros (about $ 3.24 billion) such as ABB, Schneider Electric, Ferrero, OSRAM and Kaufland.

Before the 2008 financial crisis, CRACAN, “Manufacturing, Tourism and Building, has noticed widespread foreign investment on a large scale. But over the past few years, this has shifted, with electronics, software development and the use of external sources and car parts, the main beneficiaries.” Companies from the Netherlands, Austria and Greece lead investment fees.

In the wider economy, large-scale investments in infrastructure and other major areas funded by the European Union, which amounted to about 16.3 billion euros to Bulgaria since joining in 2007-have strengthened the stable and proactive financial sector to modernize. All this made the country more attractive to Western companies and banks.

Reform

And 2025, so far, looks encouraging. On January 1, Bulgaria joined the Schengen region of the European Union, which guarantees the freedom of movement for people in 29 countries. Against expectations, a coalition government of minorities was formed in that month, as a potential end was filled with nearly four years of political beating that hindered reforms and puts absorption that affects the need of European Union money at risk.

Although it includes a party in support of Russia, the new government says it is committed to measures that include reforming public purchases, limiting bureaucracy and corruption, and-in its essence-everything is required to cancel the insurance of the money of recovery and flexibility in the European Union (RRF), which will disappear forever unless it is used this year.

“You will get that Bulgaria will get about 5.7 billion euros of money that should not be paid, which represents about 6 % of gross domestic product, provided that they are subject to structural repairs to cancel their insurance,” says Krakan, who notes that Bulgaria is behind all the Central and Eastern European countries in feathers.

When updating its strategy in Bulgaria, EBRD promotes three priorities: enhancing the competitiveness of the private sector, including small and medium -sized companies and increased promotion of Bulgaria’s attractiveness as a goal of foreign direct investment; Enhancing the flexibility of the financial system to make it more flexible and capable of absorbing European Union funds; And support the green transition by enhancing the use of renewable energy sources, increasing energy efficiency, and improving energy security in the long run.

EBRD has already invested approximately 4.8 billion euros in more than 307 projects in Bulgaria and numbers on the strategy, as well as promised government reforms, allowing more investment to move forward.

The green transition received a batch in February when the government revealed the governance 2025-2029. BluePrint has been prepared with the help and support of international financial institutions EBRD and the World Bank, and includes a strategy for sustainable energy development and plans to make huge infrastructure investments, including new water and nuclear units.

Coal is currently half of the energy produced in Bulgaria. Current efforts to reduce this accreditation include solar energy investments, which are expected to enhance the capacity from 1 GW to 3 GSW over the next few years. More investments in wind and water energy are expected.

Among the renewed investors, Inry in Austria, who got the Karadchlaovo Solar Park 174 MW in Bluefdev five years ago; And Rezolv from the Czech Republic, which works on Saint George, Shamsi 165 hectares, 229 MW near the Roman border.

Foreign investment flows are lagging behind

How does the future look like? Fitch Translses gives BBB Outlook positive, says Malgorzata KrZywicka, sovereign rating manager, says he depends on the expected accession area of ​​the euro area on January 1, 2026.

“The country has a good and general public budget,” with the levels of public government debts in the European Union after Estonia after Estonia, while the currency council – at the site since 1997 – was also important, which helps to create a very “euro economy”. She adds that the jury is still outside it, whether good news will continue to come. Institutional and structural reforms are vital.

“Until now, structural reforms were more cautious and weaker than the one carried out by Bulgaria’s neighbors,” Krzywicka notes, “While wages and costs were increasing. This means that their competitive advantage is shrinking, which, along with narrow work supplies, means an environment that does not go to FDI.”

Foreign investment flows decreased last year. According to the Bulgarian Central Bank, foreign investment decreased by approximately 55 % compared to 2023, to 1.49 billion euros, equivalent to only 1.5 % of GDP compared to 3.5 % in 2023.

He played political instability – and a feeling of economic political tree – without a role in this, and governance issues did not help either. Bulgaria lags back its neighbors, Romania and Hungary, in the perception of corruption, noticing Kerziica.

European Union’s absorption rate is one of the bell of physical fitness direct investment. In this, it contradicts Bulgaria’s record with Croatia.

She says: “(Croatia) has the highest absorption of funds in light of the continuous national economic program in Croatia due to the government’s strong commitment to the Reform Business schedule.” “Improving the institutional capacity ensures that the money is coming and used in an effective and transparent way.”

Investors are also looking for reform before returning to Bulgaria, but their contribution is crucial if Bulgaria wants to meet the rapprochement gap with other European Union countries.