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- GDP (PPP):
- $128.6 billion
- 1.7% growth
- 1.2% 5-year compound annual growth
- $17,860 per capita
- Inflation (CPI):
- FDI Inflow:
Bulgaria has maintained strong momentum in liberalizing economic activity while taking steps to restore fiscal discipline. Public debt and budget deficits remain among the region’s lowest. Open-market policies are encouraging flows of trade and investment. Efforts are underway to revitalize the stalled privatization process.
Economic Freedom Snapshot
- 2016 Economic Freedom Score: 65.9 (down 0.9 point)
- Economic Freedom Status: Moderately Free
- Global Ranking: 60th
- Regional Ranking: 28th in Europe
- Notable Successes: Management of Public Finance and Regulatory Efficiency
- Concerns: Property Rights and Corruption
- Overall Score Change Since 2012: +1.2
Continued reform is needed to ensure the growth of economic freedom and encourage vibrant economic development. The judicial system remains inefficient and vulnerable to political interference, and corruption is still perceived as widespread.
From May 2013 to October 2014, Bulgaria held a European Parliament election and two national parliamentary elections. A year after Bulgaria’s 2013 parliamentary election and amid protests against low living standards, high energy costs, and corruption, President Rosen Plevneliev dissolved Parliament because of banking instability. Boyko Borissov of the center-right GERB party formed a minority coalition government with the center-right Reformist bloc and became prime minister for the second time. The eurozone crisis and internal instability have hurt the economy. Bulgaria remains one of the EU’s poorest countries, and adoption of the euro is unlikely. Political instability hampers economic reform and efforts to reduce public corruption. Tourism, information technology and telecommunications, agriculture, pharmaceuticals, and textiles are leading industries. Despite some EU protests, Bulgaria continues to work on its section of the Azerbaijan/Turkey-backed Trans-Anatolian Natural Gas pipeline.
Corruption remains a serious problem in Bulgaria. The EU intervened several times in 2014 because of concerns about a fraud-prone energy deal and the collapse of a major bank, both seen as resulting from illicit collusion among the political and economic elite. Corrupt and inconsistent public administration, a weak judiciary, and organized crime continue to hamper Bulgaria’s economic prospects. Property rights are not well protected.
The individual income and corporate tax rates are a flat 10 percent. Other taxes include a value-added tax and an estate tax. The overall tax burden equals about 26.3 percent of total domestic income. Government spending amounts to 36.3 percent of total domestic output, and deficits have widened to slightly over 2 percent of GDP. Public debt equals about 27 percent of GDP.
Launching a business is now less time-consuming, and the minimum capital requirement has been eliminated. Labor regulations are relatively flexible, but the non-salary cost of employees can be burdensome. In 2015, the government began to reduce subsidies to the largely state-owned, loss-making energy sector by abolishing feed-in tariffs for new renewable energy projects and reforming the energy regulator.
EU members have a 1 percent average tariff rate. Although some non-tariff barriers exist, the EU is relatively open to external trade. Bulgaria’s relatively weak regulatory and judicial systems may deter foreign investment. The financial sector remains stable and well capitalized. All state-owned banks have been privatized, and credit is generally allocated on market terms.