Annual inflation in Bulgaria will accelerate to 4% at the end of 2026, and real GDP growth will slow from 3% in 2026 to 2.8% in 2028.
This is indicated by the base scenario of the BNB forecast. The forecast is contained in the bank's “Economic Review“, which presents an analysis of the main development trends in the Bulgarian economy based on data and information published as of March 19, 2026, quoted by BGNES.
In 2025, real GDP growth amounted to 3.2% according to seasonally adjusted data. Private consumption continued to make the largest positive contribution to economic activity growth, while net exports contributed negatively, mainly due to one-off and Bulgaria-specific factors.
Labor market conditions remained tight in 2025, with employment recording its highest growth rate since 2008 and the unemployment rate declining to 3.5%. Labor shortages remained historically high and continued to exert upward pressure on compensation per employee.
Annual inflation, as measured by the Harmonized Index of Consumer Prices (HICP), stood at 2.1% in February 2026, with its slowdown compared to December 2025 (3.5%) mainly due to a base effect related to the more significant increase in the prices of some goods and services in early 2025, as well as the decrease in the price of transport fuels in the first two months of the year.
As a result of the escalation of the conflict in the Middle East, the price of crude oil on international markets increased significantly in March, which is expected to have an impact on the increase in transport fuel prices in the country in the coming months.
According to the baseline scenario of the BNB forecast, real GDP growth will gradually slow down in forecast period from 3% in 2026 to 2.8% in 2028. Annual inflation will accelerate to 4% at the end of 2026, while average annual inflation is expected to reach 3.7% in 2026 and 3.2% in 2027 and 2028.
In view of the increased uncertainty resulting from the military conflict in the Middle East, the baseline scenario of the BNB forecast has been supplemented with two adverse scenarios, the purpose of which is to illustrate the possible macroeconomic effects of the realization of shocks of different strength and duration on the supply and prices of energy goods.
In the adverse scenario, average annual inflation is higher compared to the baseline scenario by 0.7 percentage points in 2026, by 1.4 percentage points in 2027 and by 0.6 percentage points in 2028, while in the highly adverse scenario, the simulations show that headline inflation is higher than the baseline scenario by 1.2 percentage points in 2026, by 3.4 percentage points in 2027 and by 2.3 percentage points in 2028, reflecting the stronger manifestation of indirect and second-round effects.