Foreign investment in Bulgaria has drastically fallen by 65% in 2024, according to the latest data from the Bulgarian National Bank reported at the end of October. This decline is attributed to several factors, including weakening demand from traditional markets in Europe and around the world, as well as ongoing political uncertainty within the country. As a result, foreign investors have largely been avoiding Bulgaria, and even those already operating in the country are hesitant to expand their operations.
The reduction in foreign investment is seen across various categories. One significant drop is in the flow of equity capital, which represents foreign companies’ investments into Bulgarian businesses and is an indicator of long-term investor interest. In the period from January to October, foreign investments in equity capital totaled just 47 million euros, a stark contrast to 786 million euros during the same period last year. Not only has the influx of new capital slowed, but foreign companies also withdrew 165 million euros in the third quarter of 2024.
Reinvested profits from foreign-owned companies in Bulgaria have also significantly decreased, with 1.3 billion euros reinvested in the first ten months of 2024, compared to 2.8 billion euros during the same period in 2023. This drop reflects both lower corporate profits in Bulgaria and the repatriation of profits to the headquarters of foreign investors abroad.
In addition, loans to businesses with foreign participation have seen a negative shift, with foreign-owned enterprises repaying 103 million euros in loans as of the end of October, 81 million euros more than the amount repaid in the same period last year.
Overall, the net flow of foreign direct investment (FDI) into Bulgaria from January to October stands at just 1.241 billion euros, a mere 1.2% of the country’s GDP. This is a 65.2% decline compared to the 3.566 billion euros (3.8% of GDP) in 2023.
Foreign investment in Bulgarian real estate has also contracted. The net flow in this sector was negative, with a decline of 9.7 million euros, largely due to the withdrawal of 18.6 million euros by Russian citizens who had purchased property in Bulgaria in previous years. (Novinite)