If the energy crisis from the Persian Gulf continues to deepen, the Bulgarian economy is threatened by stagflation. This was stated by the member of the Fiscal Council and former Deputy Minister of Finance Lyubomir Datsov, quoted by the Bulgarian National Radio. His comment comes against the backdrop of an unprecedented global shock in oil and gas supplies, caused by the escalating military conflict in the Middle East, which is blocking key trade routes through the Strait of Hormuz.
According to the financier, the country is facing an extremely complex situation, in which economic growth is slowing down and inflation remains high. In such an environment, the possibilities for reaction through the state treasury are severely limited.
"Stagflation is a state of the economy in which you have both low economic growth and relatively high inflation. And everything that can be done will be done through the budget. But the budget will start losing revenue because of this economic crisis, i.e. it will have nowhere to borrow to finance it," Datsov pointed out.
He stressed that the only remaining instrument for the government will be to take on new debt. The problem is that almost all other countries in Europe and around the world are in a similar situation and will seek fresh resources from international markets. This will inevitably make loans more expensive.
Datsov is categorical that short-term measures to stimulate consumption are the wrong approach. "You cannot pump up consumption further because you are deepening the crisis. The measures that are proposed to support consumption are working in the opposite direction. Structural measures are needed, not measures to block the situation, because they only consume resources," added the former deputy minister.
The expert's analysis is based on the real picture of international markets. Since the beginning of military operations in Iran in February 2026, global energy security has been under extreme pressure. The blockade of the Strait of Hormuz has stopped the movement of nearly 20 percent of the world's oil and huge quantities of liquefied natural gas, forcing some of the largest suppliers to declare force majeure under their contracts.
Lyubomir Datsov commented that with a quick end to the military operations – within ten days – the consequences for Bulgaria will remain minimal. However, if the conflict drags on, the reserves will quickly run out.
"Perhaps Bulgaria is currently in a good situation because of the reserves it has, and also because of its own refinery. But all this will change if the crisis continues, because at the moment the crisis and prices associated with the risky situation and reduced supplies from the Gulf could turn into something like a global energy shortage due to the inability to restore depleted reserves and ensure consumption," warned the member of the Fiscal Council.
As an example of the scale of the turmoil, the financier gave the United Arab Emirates, where fuel prices have increased by 40 percent in just two weeks. So far, the increase in prices at gas stations in our country is more moderate compared to other European countries, but this buffer is temporary and depends entirely on the outcome of the geopolitical crisis in the Middle East.