site.btaGerman business agency: Political Crisis in Bulgaria Impacts Business Climate

Bulgaria's economy is facing new risks - rising prices are putting companies and households under pressure, while the energy crisis is yet to be resolved, the German-Bulgarian Chamber of Industry and Commerce told BTA on Wednesday quoting Germany Trade & Invest's December 2022 bulletin. The ongoing political crisis in Bulgaria also has an impact on the business climate.

Last year, Bulgaria's economy continued to recover from the coronavirus pandemic. Private consumption and exports of services were the main growth drivers. The food and metal processing industries are benefiting from higher prices on the world market, according to data from Bulgaria's National Statistical Institute cited in the publication. Inflation is increasingly becoming a problem for economic growth. Falling real wages and high energy costs for households will curb domestic demand in 2023. Exports will also decline given the weaker eurozone economy. The Vienna Institute for International Economic Studies forecasts real GDP growth of 3% in 2022 and 1.5% in 2023, the publication reads.

Employers try to counter inflation by increasing wages as much as possible, while refraining from hiring new employees. According to the European Commission, the unemployment rate will remain at 5.2% in 2023.

Bulgaria needs to stimulate new investment in the long run, the publication points out. Some companies have discussed their investment plans but are reluctant to implement them, pointing to the current political uncertainty as the reason.