The Bulgarian National Bank has revised upwards its forecasts for growth of the Bulgarian economy and inflation in the coming years. This is stated in the BNB's Macroeconomic Forecast, published on the institution's website.
The Bulgarian economy will grow by 2.9 percent this year, and growth of 2.7 percent is expected in the next year, 2026. This represents an increase compared to the interim forecast of 0.1 percentage points and 0.5 percentage points for this and next year, respectively. For comparison, in the previous forecast, current as of March 26, the BNB expected GDP growth of 2.8 percent for 2025 and 2.2 percent for 2026.
However, the Central Bank lowers its expectations for GDP growth in 2027 from 3.1 percent to 2.7 percent, or a downward revision of 0.4 percentage points.
The BNB also revises its expectations for annual inflation in Bulgaria upward for this and the next two years. The Central Bank expects annual inflation (according to the harmonized index of consumer prices) in 2025 to reach 3.8 percent, compared to the expected 3.5 percent in the March forecast. In 2026, annual inflation is also expected to reach 3.8 percent, compared to 2.5 percent in the interim edition of the macroeconomic forecast, and in 2027, inflation is expected to be 3 percent, which represents a revision of 0.4 percentage points compared to the March forecast.
The revision to higher real GDP growth compared to the March 2025 forecast is minimal and is mainly due to the projected stronger growth in domestic demand components (mostly private consumption) and the assumption of a larger positive contribution from inventory changes in 2025. given the increased economic and geopolitical uncertainty, the BNB indicates.
The change in the profile of real GDP growth in 2026 and 2027 compared to the previous forecast is mainly due to the different dynamics of the contribution of net exports to GDP growth, which is influenced by the new assumptions for the growth of external demand for Bulgarian goods and services and a change in the approach to reporting the import component of public investments in military equipment, the forecast says.
The inflation forecast has been revised towards a stronger increase in consumer prices at the end of 2025 as a result of the projected higher rates of increase in prices of services and food in line with the upward revisions in the growth of private consumption and wages, the BNB indicates.
The upward revision in 2026 is mainly due to the projected higher core inflation and, to a lesser extent, to the stronger increase in food prices and administered prices, while the revision in 2027 covers all major subcomponents of the HICP, the forecast says.
The BNB notes that with regard to the annual growth of deposits of the non-government sector, it is assumed that it will accelerate to 15.7 percent at the end of 2025, mainly as a result of the expected more intensive deposit of free cash in the banking system in the period before Bulgaria's accession to the euro area for the purpose of subsequent conversion into euros.