Investment Property in Bulgaria

Economy

Economic collapse post-communism

The fall of communism led to a contraction in the Bulgarian economy of some 40% in 1990 and 1991, accompanied by a fall by a similar percentage in the standard of living experienced by the average Bulgarian, as determined by relative purchasing power. Pre-1990 economic levels were only reached once again as recently as 2004; this protracted delay came largely due to an economic collapse in 1996 which almost brought the country to its knees.

Positive outlook

Recent years, however, have seen a far healthier economic outlook. The drive towards EU membership has resulted in significant financial support from the Union’s banking institutions and this, coupled with natural growth in trade and industrial output (with the latter predicted to have risen in 2006 by over 15%) has led to extremely healthy growth almost across the board. Unemployment, which skyrocketed immediately after the fall of the Iron Curtain, is expected to fall below 10% in 2007.

GDP growth

Bulgaria’s GDP growth in 2006 was 6.1%, up from 5.5% in 2005, although it is predicted to slow slightly in 2007. The average rate of inflation in 2006 was 7.3%, and it is predicted to fall to 5% in 2007, and to 3.5% the following year, according to the Economist Intelligence Unit. Bulgaria’s current-account deficit is also predicted to fall gradually over the next two years, from just under 16% of GDP in 2006.

EU aid

Bulgaria will receive an estimated €4.6 billion over the next two years from the EU, which equates to more funding per capita than any other new EU member has been granted. As well as receiving aid, EU membership has given Bulgaria an economic security, which benefits not only the Bulgarian people but also those who are investing in the country.

Foreign direct investment

Bulgaria’s business climate has benefited from ongoing structural adjustments and low inflation levels which have attracted a considerable amount of foreign direct investment.

Industry sectors

Bulgaria’s economy was historically largely agriculture-based and real industrialisation only came to the country under communism. However, in recent years there has been a marked shift away from both agriculture and industry towards the provision of services; the service sector now accounts for just under 66% of GDP, with industry contributing 26% – still a very respectable proportion - and agriculture a mere 8%.