The World Bank has revised down its forecast for Bulgaria's economic growth in 2025, citing a broader global economic slowdown. In its latest report, ?Accelerating Growth through Entrepreneurship, Technology, and Innovation,? the World Bank predicts global economic growth to decelerate to an average of 2.3 percent in 2025/2026, down from 2.6 percent in 2024. This is primarily due to a widespread economic slowdown in major economies, which is over 0.5 percentage points lower than the pre-pandemic growth rate of 2010-2019. The factors contributing to this downturn include lingering trade policy uncertainties and persistent weaknesses in investment and foreign trade.

For Bulgaria, the World Bank now expects GDP growth to drop to 1.6 percent in 2025, a downward revision from an earlier forecast of 2.8 percent for 2024. This adjustment marks a 1.2 percentage point reduction from the January 2024 projections. By 2026, the World Bank forecasts that Bulgaria's GDP will further slow to 2.1 percent, a decrease of 0.6 percentage points compared to its previous estimate.

In contrast, other institutions have more optimistic projections. The International Monetary Fund (IMF) estimates that Bulgaria's economy will grow by 2.5 percent in 2025, down slightly from 2.8 percent in 2024. The Bulgarian National Bank (BNB), however, has raised its growth forecast to 2.8 percent for 2025, while the Bulgarian Ministry of Finance's updated budget forecast projects a 2.8 percent GDP growth for 2025 and 3.0 percent in 2026. The Fitch rating agency also predicts a stronger economic performance, forecasting a 3.1 percent increase in GDP for 2025.

Looking at past performance, the World Bank reports Bulgaria's GDP grew by 7.8 percent in 2021, 4.0 percent in 2022, and 1.9 percent in 2023. However, challenges persist. The country's investment-to-GDP ratio stands at 18 percent in 2024, which is below the EU average of 21 percent. This lack of investment hinders long-term economic growth, while weak labor productivity remains a significant concern. Over the past 15 years, sales relative to worker productivity have been declining, reflecting insufficient structural reforms and underperforming businesses.

The World Bank also highlights broader economic struggles within the eurozone, with many countries facing deteriorating growth prospects due to rising trade barriers, political uncertainty, and waning competitiveness. In particular, the German economy is expected to contract for the second consecutive year in 2024, with severe challenges in the industrial sector, especially the automotive industry.