Allianz Trade has revised its inflation outlook for Bulgaria for 2026, raising the forecast from 2.8% to 3.7%, citing mounting pressure from energy markets and broader global economic instability. The global trade credit insurer, which also operates in Bulgaria, says the adjustment reflects the combined impact of the ongoing energy shock and shifts in international economic conditions that are feeding into domestic price levels.
Analysts point in particular to Bulgaria’s heavy dependence on imported energy, with oil and natural gas supplies described as nearly fully reliant on external sources. Energy costs are estimated to account for about 11% of the consumer basket, making the economy highly sensitive to fluctuations in fuel prices. According to the report, the recent surge in fuel costs linked to geopolitical tensions in the Middle East has been a key factor behind the upward revision in inflation expectations.
The report also warns that higher energy expenses will create pressure on both businesses and households. Companies are expected to face rising operational costs, while consumers will likely experience reduced purchasing power and weaker consumption levels. In addition, Allianz Trade highlights that tighter monetary conditions are likely to persist, with interest rates expected to remain elevated amid continued uncertainty, complicating access to financing for firms. Limited fiscal space, including a projected budget deficit of around 3%, is also seen as restricting the state’s ability to cushion the impact.
On the global level, the insurer forecasts continued strain on supply chains and trade flows due to geopolitical fragmentation. It expects corporate insolvencies to keep rising, after increasing by 6% in 2025 and a further 3% in 2026, with a peak anticipated in 2027. The report concludes that the energy shock is likely to weigh on inflation trends across Europe, not only in Bulgaria but in a wider regional context. (Novinite)