OECD projects 2.5% economic growth for Bulgaria in 2026
Bulgaria’s economic growth is projected to moderate to 2.5 per cent in 2026 and 2.3 per cent in 2027, the Organisation for Economic Co-operation and Development (OECD) said in its Economic Outlook, published on June 3.
The forecast for 2026 is lower than the OECD’s forecast in December, of 2.6 per cent, but higher than the 2.3 per cent forecast in June 2025.
In its June 3 2026 report, the OECD said that in Bulgaria, consumption growth will slow as wage and social transfer growth ease and higher energy prices related to the evolving conflict in the Middle East erode real incomes.
Investment will be led by public outlays backed by EU fund disbursements, before private investment gradually recovers as uncertainty fades.
Higher energy prices are pushing up near-term inflation, and a prolonged escalation of energy prices could risk inflation remaining elevated.
Borrowing costs for households and firms have eased slightly since euro area accession.
As the budget deficit was above three per cent of GDP, a steady medium-term fiscal adjustment and fiscal strategy is needed to strengthen the public finances and manage population ageing, climate change and defence spending pressures, the OECD said.
Structural reforms to accelerate renewable energy deployment, expand domestic transmission and cross-border interconnection infrastructure, and invest in energy storage would strengthen energy security while developing a price-based demand response mechanism along with improved public transport would help reduce energy demand and durably lower inflation.
Annual GDP growth moderated to 2.9 per cent in the first quarter of 2026, the OECD said.
Private consumption remained the key driver, supported by rising real incomes, as well as growth of credit and social transfers. Investment exceeded expectations as the implementation of EU-financed projects gained pace following a year of relative political stability.
Economic sentiment and consumer confidence fell to their lowest levels since 2022 following the government’s resignation in December 2025.
Industrial production continued to contract in early 2026, but the labour market remains tight, with the unemployment rate falling to 3.5 per cent in 2025.
Annual headline inflation jumped to six per cent in April, driven by higher energy prices, following a dip in February, the OECD said.
The conflict in the Middle East has pushed fuel and wholesale electricity prices up, though less severely than during the Russia-Ukraine war, which disrupted gas supplies and regional electricity markets more directly, the report said.
“Although Bulgaria’s direct exposure is limited, the country’s relatively high energy spending leaves the economy vulnerable to global energy price volatility.”
The government moved quickly to shield vulnerable households and firms from this rise in energy costs.
Measures included a 20 euro monthly subsidy for low-income car-owners, reduced fuel excise taxes for agricultural producers, and subsidies for energy-intensive industries.
Transport carriers will benefit from a deferral of toll fee increases and higher transport aid while businesses will be supported with monthly electricity price compensation scheme, shortening the previous semi-annual payments, the report said.
