Bulgaria Economy Facts
BULGARIA is the poorest EU member countries in terms of gross domestic product (GDP) per capita. It was formerly a prominent agricultural country but underwent rapid industrialization during the communist era, when agriculture was also collectivized. Today, the service sector is predominantly dominated by tourism and foreign trade.
The informal sector of the economy is estimated to be around one third of GDP. The proportion of the labor force in the “gray” or “black” sector is believed to be even higher. This means that many work without employment contracts and security, at the same time as the state loses tax revenue.
- Countryaah.com: Major imports by Bulgaria, covering a full list of top products imported by the country and trade value for each product category.
The economy during the communist era was marked by heavy industry linked to trade with the Soviet Union. The transition to market economy during the 1990s was initially slow and painful.
During the first year of the decade, agricultural and industrial production fell sharply, and both inflation and unemployment rose rapidly. Many Bulgarians suffered badly when prices rose and an acute shortage of grain and energy arose. Many residents survived growing in their own garden. Foreign debt escalated.
- Abbreviationfinder.org: Check this abbreviation website to find three letter ISO codes for all countries in the world, including BUL which represents the country of Bulgaria. Check findjobdescriptions to learn more about Bulgaria.
In order to prevent an economic collapse, the government signed an agreement with the International Monetary Fund (IMF) on privatizations and financial tightening in exchange for loans. However, political instability with several changes of government caused the reform work to stop. The economic crisis culminated in early 1997 after the IMF suspended its payments as a result of promised banking system reforms and a series of privatizations had not been implemented.
The bourgeois government that took office in 1997, with the support of the IMF, accelerated the transition to a market economy. A decisive measure was the establishment of a special currency control body, lev, which was linked to the German D mark (later linked to the euro). The privatization of state-owned companies was also accelerated.
The measures involved an economic recovery. In 1998, GDP grew for the first time since 1989, inflation slowed and the exchange rate stabilized. After several years of large deficits, the state budget came into balance, partly due to increased tax collection. It was mainly the private services sector that contributed to the upturn, while industry and agriculture were still struggling with major restructuring problems.
During the first years of the 2000s, growth was good, unemployment fell and hundreds of new small businesses were started. Banking confidence was restored after restructuring and privatization of the banks. When the negotiations for EU membership were completed in 2004, foreign investment increased significantly. But the problems remained great with widespread corruption and the involvement of organized crime in the economy.
The economy is braking
Concerns could be seen on the horizon even before the international financial crisis hit in the fall of 2008. Inflation had started to rise again, partly because of higher food and fuel prices. Productivity in industry and agriculture was still low and foreign debt high.
The financial crisis caused the economy to slow down, just like in the outside world. Growth, which for some years was at just over 6 percent a year, was negative. Although the growth curve was soon on plus again, the pace became much slower than before. Foreign investment was lower. The debt crisis in the euro area countries – not least the important trading partner Greece – contributed to the inertia.
The government took measures, such as cuts in health care and education. For many Bulgarians, the standard of living fell for several years with rising costs without real wage increases.
In 2014, trade with Russia and Ukraine also decreased, due to the crisis there. In addition, the banking system was rocking. So-called bank riots occurred when savers in panic tried to withdraw their money because of rumors in social media of an impending collapse. According to the authorities, conscious rumor spread behind the rush. The result was Attland’s fourth largest bank, CCB, went bankrupt. The largest co-owner was accused of fraud and fleeing. Account holders lost their savings and because many public bodies had money in the bank, taxpayers were also affected.
FACTS – FINANCE
GDP per person
US $ 9,273 (2018)
US $ 65 133 million (2018)
3.1 percent (2018)
Agriculture’s share of GDP
3.6 percent (2018)
Manufacturing industry’s share of GDP
14.4 percent (2018)
The service sector’s share of GDP
59.2 percent (2018)
2.5 percent (2019)
Government debt’s share of GDP
20.4 percent (2018)
US $ 40,438 million (2017)
The EU freezes the payment of aid
The European Commission freezes the payment of around EUR 500 million in promised support to Bulgaria due to continued widespread corruption and organized crime.
New minister responsible for EU support
A new deputy prime minister post is set up. The prime minister’s primary task is to oversee the management of EU support. The decision is made after the EU Commission has highlighted a lack of transparency in Bulgaria’s handling of EU money.
The Interior Minister is forced to resign
Interior Minister Rumen Petkov is forced to resign after a parliamentary inquiry has revealed links between high-ranking representatives of the Interior Ministry and leaders in organized drug trafficking. In addition to Petkov, three other ministers will also be replaced in a refurbishment in the government.