site.btaBulgaria Has Reached 2/3 of EU's Average GDP per Capita, but Convergence Is Not Guaranteed, Think-Tank Says

The gap which separates Bulgaria from the average level of economic development in the European Union has narrowed for another consecutive year, according to early estimates of gross domestic product per capita based on purchasing power parity. In 2024, the ratio between GDP per capita (PPP) in Bulgaria and the average EU level surpassed the two-thirds mark, but the pace of catching up has been considerably slower than that of Romania, Institute for Market Economics (IME) senior economist Adrian Nikolov says in an analysis published on the IME website on March 28.

According to Nikolov, France (99%) and Finland (103%) were closest to the average GDP-per-capita value in the bloc in 2024. The usual pattern was preserved, with the "new" member states concentrated in the lower half of the ranking and the "old" member states in the upper half. Leaving the "untypical" economies of Ireland and Luxembourg aside, the most developed EU economies (Sweden, Germany, Austria, Belgium, Denmark, the Netherlands) were within the range from 115% to 130% of last year's EU average. In recent years, all "new" members in Central and Eastern Europe, including Romania, have reached ratios of 70% to 90%. Only Czechia and Slovenia surpassed the 90% mark, while Latvia, Slovakia, Hungary, Croatia and Romania remained at 70% to 80%.

Since 1999, when the ratio for Bulgaria dropped to its lowest point of 28%, the country has moved towards convergence with the EU gradually and steadily. During this period, the gap has narrowed by between 1 and 3 percentage points annually, with notable exceptions in 2005 and the global downturn year 2009, and most recently in 2013. The latest major crisis, the COVID pandemic and its effects, accelerated the convergence as the large Western economies suffered a more severe recession. Since the end of last century, when Bulgaria obtained clear prospects of joining the EU, its economy has sustained a faster rate of growth than the Community, the analysis goes.

Over the last few years, the most relevant comparison has been with the Greek economy, which in 2020 dropped to 62% of the EU's average GDP per capita (PPP), witnessing the widest gap in decades. But Greek reforms have produced visible results, and currently, the Mediterranean country is back at more than 70% and Bulgaria is unlikely to outstrip its southern neighbour in the coming years. Still, convergence is rather obvious: while in 2006 the parameter for Bulgaria was 38% and Greece recorded a peak of 96%, at present the two economies run parallel.

It would also be interesting to draw a comparison between Bulgaria and Romania. The latter started off from a lower point before both nations joined the EU in 2007, but by 2020 managed to surpass the 70% mark. If Romania keeps up its current pace of convergence with the EU, it can go beyond 80% in 2026 and thus position itself among the wealthier nations of Central and Eastern Europe. The divergence between Bulgaria and its northern neighbour over the last few years is due to multiple reasons, but most conspicuously, Romania has performed far better than Bulgaria in the field of rule of law and anti-corruption and has been more successful in attracting foreign investments, IME says.

It should be noted that the benchmark is not static. The average level of economic development in the EU changes every year, influenced mainly by the dynamics of the large Western economies. Therefore, we cannot take it for granted that Bulgaria will continue to catch up at the current pace and will reach the EU average in 15 to 20 years' time. Judging by the development of most other Central and Eastern European member states, Bulgaria is equally likely to reach 70-75% and stay there as growth slows down, particularly under a scenario of low investments, high deficits and rapidly growing public debt, the analysis concludes.