Bulgarian workers raised their output per hour worked by an average of 2.5% a year between 2020 and 2024 — five times faster than the EU average of just 0.5%. The figures come from the latest analysis by the Vienna Institute for International Economic Studies (wiiw), published alongside an updated database on growth and productivity.
In Bulgaria, value added grew by an average of 2.8% a year over the period. The report's authors say the growth comes mainly from people and machines working better, not from businesses pouring more capital into each hour worked. The picture looks similar in Croatia, where value added grew by an average of 3.7% a year and productivity by 2.3%.
Poland's numbers look close — 2.6% value added and about 2% productivity a year. The difference is that in Poland, investment really does drive productivity up, because the money put in per hour worked is rising — something that isn't happening the same way in Bulgaria or Croatia.
The analysis, by Robert Stehrer, Sebastian Drazski and David Czenz, shows the whole EU economy is growing more slowly. Value added in the bloc grew by an average of 2.2% a year between 1995 and 2008. Between 2012 and 2019, that rate dropped to 1.5%. And for 2020-2024, it fell further, to 1.2%. Labour productivity has slowed in the same way — from 1.3% before the financial crisis, to 0.9% in the following decade, to 0.5% over the last five years.
The authors say where Europe's growth comes from is also changing. Before the 2007-2008 crisis, about three-quarters of EU growth came from better efficiency and more capital. Now the share from total factor productivity — how well the economy uses labour and capital, including technology and how work is organised — has dropped from 45% to 36%. Capital's share has also fallen, from 30% to 26.5%. More and more of the growth now comes simply from more people having jobs.
The wiiw analysis also points to an investment shortfall across Europe. Between 1995 and 2008, capital per hour worked fell in only three member states. Between 2012 and 2019, that number jumped to eight, and between 2020 and 2024, to 12 — almost half the EU's countries.
The bloc's three biggest economies show this most clearly. In Germany, average growth has shrunk from 1.7% before the crisis to just 0.1% over the last five years, with investment barely contributing to that figure at all. France is holding growth at around 1%, but it comes mainly from more people working — productivity per hour worked is actually falling. Italy has barely raised its productivity at all in the last 30 years, and between 2020 and 2024 it even saw a decline.
Austria is doing better than that: value added is growing by 0.5% and labour productivity by 0.7%. Austrians have also raised capital per hour worked by more than the EU's three leading economies.
In Spain, Greece and Portugal, annual growth ranges from 1.4% to 1.8%, but here too the main driver is employment, while the capital available to each worker is falling. The authors say money from the EU's Recovery and Resilience Facility is helping economies in southern Europe. The International Monetary Fund estimates it added more than one percentage point to growth in Greece and Croatia in 2025. So far, though, the effect comes mainly from demand and jobs, not from fresh investment in capital.
The pace at which the Baltic states and parts of Central Europe are catching up with Western Europe is also slowing. Estonia grew by 6% a year before the financial crisis and by 3.2% in the following decade, but growth there was close to zero in 2020-2024. In Latvia, the rate fell from 6.7% to under 1%, and in the Czech Republic from 3.2% to 0.5%.
The institute says these findings back up the conclusions in the reports by Enrico Letta and Mario Draghi — Europe's savings need to flow into real investment instead of sitting idle. By Draghi's estimate, the EU needs an extra 750-800 billion euros of investment a year, around 4-5% of the whole bloc's gross domestic product.
The authors warn that growth built mainly on more people working has its limits. The population is ageing, the workforce will shrink, and the average number of hours worked is falling too — so investment and productivity need to carry more of the weight, they write.
wiiw's updated database covers the period from 1995 to 2024. It gives figures for value added, productivity, and the contribution of labour and capital to growth, for every EU country, broken down across 21 economic sectors.
In an earlier comment focused only on Bulgaria, the institute said it expects better economic growth for 2026 and the following two years. The outlook is stronger than the institute's spring forecast from late April. After gross domestic product grew by 3.1% in 2025, wiiw expects the Bulgarian economy to grow by 2.5% in 2026 — higher than the 2% growth projected in its spring forecast.