EU spring economic forecast cuts Bulgaria 2025 growth forecast to 2.0%
The European Commission’s spring forecast for the EU economy, released on May 19, projected Bulgaria’s economic growth this year at two per cent, significantly lower than the 2.9 per cent figure projected in last year’s autumn forecast.
The Commission also reduced its growth estimate for Bulgaria’s economy in 2026 to 2.1 per cent from three per cent projected in the autumn forecast, released in November.
In its spring forecast, the EC attributed the lower projections to a combination of domestic and external factors. “Increased indirect taxes, higher prices for electricity, utilities and food, and hikes in international tariffs are set to weigh on the economic outlook,” the EC said.
Last year, Bulgaria’s economy grew by 2.8 per cent, exceeding the Commission’s projections (1.9 per cent in the spring forecast, raised to 2.4 per cent in autumn), but falling short of the 3.2 per cent target set in its 2024 Budget Act. Bulgaria’s 2025 Budget envisions economic growth of 2.8 per cent.
Regarding inflation, the EC said that it expected a gradual deceleration following the price increases at the start of the year, which were due to “restored higher VAT rates on bread and restaurants, higher excise duties on tobacco, increased electricity, gas, other utilities and administered prices and higher food prices.”
The Commission projected the annual harmonised consumer price index to record 3.6 per cent inflation in 2025, up from 2.6 per cent in 2024, before falling to 1.8 per cent in 2026.
The downward revision in Bulgaria’s macroeconomic outlook mirrored the decreased expectations for the EU as a whole and the euro area, which are now projected to grow by 1.1 per cent and 0.9 per cent, respectively.
Although those figures were “broadly the same rates attained in 2024”, this was a “considerable downgrade” compared to the autumn forecast, the EC said, attributing it to “the impact of increased tariffs and the heightened uncertainty caused by the recent abrupt changes in U.S. trade policy and the unpredictability of the tariffs’ final configuration.”
In 2026, growth was projected to speed up to 1.4 per cent in the euro zone and 1.5 per cent in the EU as a whole.
The spring forecast singled out U.S. trade policy as the biggest uncertainty factor, noting that an escalation of trade tensions between the EU and U.S. could depress economic growth, while a reduction in those same trade tensions would support growth.
Additionally, increased defence spending could contribute to economic growth, as would advancing reforms to boost EC’s competitiveness. But the forecast noted that climate-related disasters were also more frequent and remained a persistent source of downside risk for growth.
“The EU economy is resilient, despite global uncertainty. But we cannot be complacent. Downside risks remain, so the EU must take decisive action to boost our competitiveness,” EU commissioner for economy Valdis Dombrovskis said.
(Photo: Steve Ford/sxc.hu)
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