site.btaUnited Bulgarian Bank Analysis: Bulgaria’s Q4 Growth Beats Forecast, February-April Data Crucial to Eurozone Entry

Bulgaria's economy grew faster than expected in Q4 2024, posting a real increase of 3.4% compared to Q4 2023, United Bulgarian Bank (UBB) reported on Monday.

“As a result, 2024 also recorded a higher growth rate of 2.8%, based on preliminary data from the National Statistical Institute (NSI),” UBB Chief Economist Emil Kalchev said in an analysis of key economic trends.

The analysis points to Eurostat data on average inflation over the past 12 months, which indicates a 0.1% difference in meeting the price stability criterion for eurozone entry under the Maastricht Treaty. On this basis, Bulgaria has submitted a request for extraordinary convergence reports from the European Commission and the European Central Bank. “By unwritten rule, these reports refer to April data, meaning inflation dynamics from February to April will have a decisive impact on Bulgaria’s fulfilment of this criterion,” Kalchev predicted.

On the demand side, economic activity last year was driven by final consumption, which rose by 4.3% in real terms and accounted for 77.8% of GDP. “Against this backdrop, investments declined by 1.1%, reflecting the country’s political instability. However, because investments occupy a far smaller share of GDP (17.2%), they did not weigh significantly on economic growth. Moreover, net exports remained positive at around 3.5% of GDP, despite exports falling 0.8% and imports increasing 1.3% over the year,” Kalchev noted. On the production side, growth was propelled by services, construction, and industry.

Agriculture contracted by 7%, but with a share of only 2.8%, its overall impact on GDP growth in 2024 was minimal. In the leading services sector of the economy, all individual service groups posted real growth last year, with the fastest rise of 5.5% registered by public administration, education, human health, and social work.