The European Commission’s spring forecast points to a weaker-than-expected economic outlook for both Bulgaria and the wider eurozone, coupled with higher inflation pressures across the region. According to the report, the slowdown is driven by a mix of fiscal strain in member states and external shocks, including the ongoing conflict in the Middle East, which is feeding into higher energy costs and broader economic uncertainty across Europe.
For Bulgaria, Brussels projects GDP growth of 2.5% in 2026 and 2.2% in 2027, while inflation is expected to stay elevated at 4.2% this year before easing to 2.6% in 2027. The Commission links the weaker performance to rising fiscal pressure, largely shaped by higher public sector wages and increased social spending. At the same time, private consumption is expected to soften, while public spending continues to play a stabilizing role in supporting overall growth.
On the eurozone level, growth is also revised downward, with expansion expected to slow to 0.9% in 2026 compared with earlier projections of 1.2%. The Commission attributes this to renewed energy shocks triggered by the Middle East conflict. As noted in the report, “the conflict in the Middle East has caused a new energy shock, which is again increasing inflation and shaking economic sentiment.” Inflation expectations have been significantly revised upward, reaching 3.0% in the euro area this year, compared with an earlier estimate of 1.9%.
Across the broader European Union, inflation is projected at 3.1% in 2026 before gradually declining to 2.4% in 2027. Energy and food costs remain the primary drivers, alongside secondary effects on services and lingering impacts from previous policy measures. Investment activity is also expected to weaken, particularly in construction and industrial equipment, as higher costs and fiscal constraints weigh on business activity.
In Bulgaria, inflationary pressures are reinforced by higher energy prices, food price increases, and statistical effects linked to reduced hospital fees introduced in 2025. Labor market trends suggest slowing wage growth, with compensation per employee expected to drop from 10.4% in 2025 to 5.7% in 2026 and 4.3% in 2027. Despite this moderation, unemployment is forecast to remain below 4%, supported by persistent labor shortages in sectors such as construction, healthcare, manufacturing, and education.
Public finances remain under pressure, with Bulgaria’s budget deficit projected at 4.1% of GDP in 2026 and 4.3% in 2027. The Commission links this to rising social spending, wage costs in the public sector, particularly in defense and internal security, and investment support for Bulgarian Energy Holding (BEH). Government debt is also expected to rise, reaching 35.5% of GDP by 2027.
At the eurozone level, the Commission expects growth to remain subdued, with GDP expanding by 1.9% in 2026 and 1.7% in 2027. Household consumption remains a key driver, but its momentum is expected to weaken under inflationary pressure and rising energy costs. Foreign trade trends remain mixed, with some economies benefiting from exports while others face weaker external demand.
The overall assessment from Brussels is that Europe is entering a phase of moderate growth, persistent inflation, and widening differences between member states. Regional divergence is becoming more visible, with northern economies showing greater stability, southern countries facing debt and growth constraints, and Eastern Europe, including Bulgaria, experiencing more pronounced volatility linked to energy dependence and external shocks. (Novinite)