site.btaWages to Outpace Inflation at Two to One Ratio in 2024

Wages in Bulgaria will grow more than twice as fast as inflation in 2024, with an expected growth of 9%, while the average annual inflation will settle at 4%, Allianz Trade (formerly Euler Hermes) predicted in its regular report on Bulgaria. The report suggests that while wage growth is slowing compared to the 13.5% expected for 2023, it will convincingly outpace price increases.

Allianz Trade expects consumer spending growth to be lower at 2% in 2024 versus 5.5% and 3.7% in 2023 and 2022 respectively. Households are projected to be more conservative in spending because of smaller wage increases and because of rising interest rates and less favourable credit conditions.

The report forecasts that the Bulgarian GDP will experience moderate growth of 2% in 2024 and 2.5% in 2025.

Public spending is cited as the main driver of economic growth in the country this year. It is expected to grow by nearly 4%. Investment activity will also recover over the next two years, driven by public investment, including projects financed by Next Generation EU. Investment growth is projected at 4.2% this year with zero growth in 2023.

Bulgarian export is expected to recover slowly and gradually in parallel with the recovery of export markets. The forecast for this year is for growth of 4.2%. Imports are projected to recover more convincingly, so the contribution of net trade will turn negative.

Bulgaria's business environment is assessed as adequate with some unaddressed weaknesses. Among the main challenges facing the Bulgarian economy, experts point to the unresolved problems of corruption and the efficiency of the judiciary, the instability of the government and public dissatisfaction with the standard of living. They also note the vulnerability to external economic shocks due to high export dependence.

Manfred Stamer, Senior Economist for Emerging Europe at Allianz Trade, predicts that Bulgaria will join the eurozone in 2025 at the earliest.