The European Bank for Reconstruction and Development expects Bulgaria's economy to grow by 2.7% in 2026, with growth slowing to 2.5% the following year. That's according to the bank's new report on economic developments in the region, published on its website.
The forecasts for Bulgaria are unchanged from June — both for 2026 and 2027, nothing has moved.
Bulgaria's economy grew 3.4% in 2024 and 3.1% in 2025, but growth slowed to 2.8% in the first half of this year. Even so, people keep spending and companies keep investing, the EBRD notes.
Industrial output is growing again after a sharp fall in 2025. Services and construction are also moving ahead at a good pace. Exports dropped sharply in the first three months of the year but had partly recovered by mid-year.
Prices rise on energy costs
Inflation in Bulgaria, measured by the harmonised index of consumer prices, hit 6.3% in May, driven mainly by higher energy costs. Food price growth, though, had started to ease by July.
Bulgaria's public finances have worsened sharply since the start of the year. This year's consolidated budget deficit is set at 5.7% of GDP — far above target. Since July, Bulgaria has been under the EU's excessive deficit procedure, which means cutting spending will be one of the top jobs for economic policy in the years ahead.
That's why the EBRD is warning: if the government has to slash the budget quickly, it could hit people's and businesses' trust in the economy — and that trust is one of the main risks to growth.
There's good news too: getting money from the EU's Recovery and Resilience Facility is back among the government's top priorities, the EBRD says. Bank experts believe Bulgaria has a good chance of spending most of the funds it has been granted by the end of the year.
Investment remains steady, and the report says the comeback in industrial output, together with growth in services and construction, keeps propping up the economy.
Growth slows across southeast Europe
Growth across the whole southeast Europe region is slowing — from 1.4% in 2024 to 1.2% in 2025. Economic activity barely moved in the first half of this year. The main reason is Romania, whose economy is shrinking. There, budget cuts and high inflation hit household spending hard, and industrial output fell.
Romania's economy will shrink by 0.2% this year before growing 1.8% next year, the EBRD expects. Unlike its neighbours, Bulgaria is holding steady — growth stayed close to 3% in the first half of the year.
For the whole southeast Europe region, the EBRD expects growth of 0.5% in 2026 and 2% in 2027 — forecasts unchanged from June.
Costly oil, costly gas
Looking more broadly, the EBRD warns that the countries it invests in face higher costs for energy and food, droughts, trade troubles and pricier borrowing.
Oil prices jumped from around $65 a barrel before the Middle East conflict to more than $100 in April 2026, and now sit between 30% and 60% above pre-conflict levels. Some refined products, including diesel and jet fuel, rose even more sharply, the bank notes.
Gas isn't much easier. Prices have risen more than 70% since February, while global seaborne exports of liquefied natural gas fell 40%.
The EBRD also points to climate effects. Low water levels on the Danube and the Rhine have hurt shipping of industrial goods and cut power output, since less electricity came from hydro and nuclear plants.
"Water shortages, extreme weather and pricier financing are piling on top of already high energy costs and squeezing growth even further," says EBRD chief economist Beata Javorcik.
She says this is exactly why countries need to invest in their economies' ability to withstand future shocks, so they can cope better the next time a crisis hits.
The regions where the EBRD operates still rely heavily on fossil fuels — oil and natural gas make up about two-thirds of all primary energy used there. To cut that dependence on gas, countries will need to invest more in wind and solar power, in energy storage and in nuclear power.
Within the EU itself, high electricity prices keep weighing on industry. EU firms pay roughly 2.4 times more for electricity than companies in the United States — and that's pushing energy-hungry businesses to move production elsewhere.