The Fiscal Council has prepared three scenarios for the development of the Bulgarian economy in 2026, against the background of the risks that have arisen due to the instability of the geopolitical and domestic political situation at the international, regional and local levels. This was reported by BGNES.
A base (realistic), pessimistic and highly pessimistic scenario have been developed. There is a different probability that each of them will be realized, according to news.bg.
Realistic scenario
The base scenario is based on the sharp rise in energy prices as a result of the war in Iran. It is characterized by a deterioration in the external situation, which reflects a slowdown in growth.
A supply shock suddenly increases or decreases the supply of a good or service. The Fiscal Council notes that the change affects the equilibrium price of the good or service and the general price level in the economy. The supply shock can also lead to stagflation.
The realistic forecast is based on the assumption that the military conflict in the Middle East will be relatively short-lived. After mid-year, a gradual recovery of economic activity and normalization of oil and natural gas prices are expected.
The forecast for GDP at current prices is 126,987 million euros and, accordingly, nominal growth of 9.5%. Real growth is 2.5%, and the deflator is 6.8. Harmonized inflation is estimated at an average of 4.2% for the year. Real growth reflects a significant slowdown compared to 3.1% in 2025. The consumption growth rate is expected to decline to 11.7% from 14.0% in 2025. Investments amounted to EUR 25,548 million, representing a nominal growth of 1.4%, but in real terms a decline typical of a supply shock is recorded. A significant negative balance of -1,355 million euros is expected due to higher growth in imports than exports.
Pessimistic scenario
This scenario assumes that the war in the Middle East will continue beyond mid-2026. Disruptions in the supply of energy raw materials will continue until the third quarter of 2026, after which a relatively rapid recovery in trade flows will be observed.
For 2026, the forecast is GDP at current prices of 126,659 million euros and, accordingly, growth of 10.3%. Real growth is 1.9%, and the deflator is 7.2. Harmonized inflation is 4.6% on an annual basis. According to the forecast, consumption increases by 11.6%. Investments amount to 25,372 million euros. Exports increase to EUR 60,338 million (+2.5%) and imports to EUR 61,751 million (+2.8%), leading to a larger trade deficit of EUR -1,414 million.
Highly pessimistic scenario
The Fiscal Council indicates that this option is possible in the event of a prolonged shock to energy supply, including the disruption of most flows through the Strait of Hormuz. It includes logistical difficulties and damage to the energy infrastructure of energy-exporting countries in the Middle East as a result of military operations. The volume begins to normalize only in early 2027.
The GDP forecast at current prices is EUR 125,301 million, corresponding to a growth of 8%. Real growth is 0.5% and the deflator is 7.5. Harmonized inflation is 5.0% on an annual basis. Consumption is growing by 11.3%. Investments amount to 24,691 million euros, which reflects a nominal decline with no growth in private investment and minimal absorption of EU funds. Exports are growing by only 1% and imports by 2%, so the balance is strongly negative.