2018: Wind in the sails of the Bulgarian economy will not slacken

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2017 will be remembered as a good year for the Bulgarian economy which marked a GDP growth rate of 4 percent. Some say it is actually over 6 percent, if we count the shadow economy. But is that a lot or not enough?

Compared to the years following the 2008 crisis, it looks like a pretty good accomplishment, and it is, seeing as even the man in the street got to feel the effect by his pockets – wages go up by over 10 percent a year. In the most advanced regions of the country salaries have almost caught up with average European levels. Now that Bulgarians have money, they have started buying – real estate and cars. The boom in new home construction has reached such proportions that experts have been talking of a new “bubble” and how it is going to burst with a big bang. But the boom is not just in construction – sales of motor vehicles have reached record highs, with the growth rate in this sector being among the highest in Europe. Overall, analysts say that the main motors of economic growth in Bulgaria were exports and domestic consumption.

The 4 percent GDP growth is a good achievement, yet it is also a modest result, compared to the rates of economic development in the other countries of Central and Eastern Europe. Not to mention Romania with its economic growth rate of almost 9 percent, which is now in a class of its own. Poland and the Czech Republic are two more countries with enviable results – at a GDP growth rate of 5.2 and 5 percent respectively. Out of the Baltic countries, the highest percentage goes to Latvia – 6.2 percent. The comparatively modest upswing in Bulgaria is explained by experts with the country’s real potential, some even say this is the maximum ceiling, in view of the lack of foreign investments and the dire skilled labour shortages. There is, quite simply, not enough fresh capital to push the economy forward, and there is no capital because there is no one to work at new factories or companies. A vicious circle, with, as yet, no solution in sight, and slim chances of being resolved in the foreseeable future, as it takes time and effort to train skilled workers. Relying on trained workers and employees from abroad is not an answer, because salaries in Bulgaria, though following an upward trend, are still several times lower than salaries in the advanced countries of Europe.

Be as it may, the economy is forging ahead and the GDP has, for the first time, overcome the psychological barrier of 50 billion euro. All the more so that it is an established fact that public sentiments and subjective opinion have a profound effect on the business climate. In this regard things in Bulgaria are also looking up.

For the first time in 20 years social surveys show that Bulgarians are optimistic about the economy. 55 percent of respondents say they expect a better year and only 9 percent – a year that will be worse. 36 percent say they do not expect any change. This optimism is due to the upward trend in the economy, the drop in unemployment levels and to the creation of more better paid jobs that require highly skilled employees.

Yet it should not be forgotten that there is a downside to this otherwise rosy picture - poverty and backwardness. There are whole regions of Bulgaria that are ground down by poverty, one of them being the most backward and poorest region of the whole of Europe. Bulgaria is in second position in Europe in the UN’s list of countries at risk of poverty and social exclusion. Bulgarians living in big cities, and most of all in Sofia live a good life even by European standards, yet life for the people living in the countryside and smaller towns and villages is difficult even if they have a job because salaries there are paltry. Sofia is not Bulgaria, the people living in those parts of the country are apt to say with bitterness, feeling forsaken by God and government. Something that is well and truly understandable, seeing as there are half a million Bulgarians on minimum wages – as of 1 January, 2018, the minimum monthly salary will be 255 euro – and two thirds earn less than 500 euro a month. But not all is lost for the Bulgarian economy, and next year it is expected to keep up its good achievements of 2017. Which goes to show that the country is on the right track and, despite all difficulties, is slowly making progress.

English version: Milena Daynova


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