The Ministry of Finance has revised upwards the forecast for economic growth this year, but at the same time worsened its expectations for the level of inflation. This is known from the Autumn Macroeconomic Forecast, published today on the website of the finance ministry.
The country's gross domestic product (GDP) is expected to grow by 3 percent this year. This represents an increase in the projected growth compared to the Spring Macroeconomic Forecast of the Ministry of Finance, which predicted real GDP growth for this year of 2.6 percent.
In 2027, 2028 and 2029, the finance ministry now predicts Bulgaria's GDP growth of 2.5 percent, 2.4 percent and 2.4 percent, respectively. For comparison, the spring forecast assumed economic growth of 2.5 percent next year, 2.5 percent in 2028 and 2.6 percent in 2029.
The Ministry of Finance predicts that the average annual inflation in our country in 2026 will reach 4.8 percent, after which it will fall to 4 percent in 2027. This represents an upward revision compared to the spring edition of the forecast, in which the average annual inflation for the two years was expected to be 4.3 percent and 3.8 percent. The upward revision of the estimate is mainly due to the increase in fuel prices, the document states.
For 2028 and 2029, the finance ministry expects average annual inflation of 2.6 percent and 2.4 percent. For comparison, the spring edition of the forecast expected inflation of 2.5 percent.
In 2026, the number of employed people is expected to increase by 0.5 percent, and in 2027 - by 0.2 percent. The unemployment rate is expected to fluctuate around the current level of 3.4 percent in the forecast period.
The nominal growth of compensation per employee reached 7.1 percent in the first half of 2026, with the rate of increase in the indicator expected to reach 8.5 percent on average for 2026, and to slow down to 6.2 percent in 2027.
The Ministry of Finance indicates that the conflict in the Middle East continues to be a leading factor in the development of the external environment. Initial expectations were that military actions and the blockade of the Strait of Hormuz would continue until mid-2026, after which there would be a smooth normalization of the environment. After a temporary lull in late June and early July, however, the conflict escalated again, generating additional price pressure.
In the current forecast, a gradual normalization of international oil and natural gas prices is expected in 2027. The high price levels achieved and the more restrictive monetary policy will have a limiting impact on economic activity, mainly in Europe, the Finance Ministry said, quoted by BTA.
The crisis in the Middle East remains a major risk factor for the forecast, as further escalation of geopolitical tensions could keep energy prices at high levels for a longer period. In this regard, an alternative scenario with higher international energy prices and deteriorated external demand compared to the assumptions for the development of the external environment used in the baseline scenario has been considered. The results show that under the less favorable development in 2026, inflation in Bulgaria would be higher by 0.6 percentage points (pp) this year, and in 2027 and 2028 - by 0.3 pp. for each of the years. The uncertain external environment and more expensive raw materials will limit investment activity in the country, and the effect will be somewhat delayed compared to the other components of final demand. Real GDP growth will be lower by 0.1 pp. compared to the baseline scenario in 2027 and 2028, the alternative scenario also indicates.