Digitization could become next major engine of Bulgarian economy

According to a report by the global consultancy company McKinsey, presented in Sofia last week, digitization could increase Bulgaria's GDP by 8 billion euros by 2025. In relation to this view, Mediapool website commented that digitization could be next major driver of Bulgaria's growth.

The analysis shows that in the period 1996 -2017 ten countries of Central and Eastern Europe (Bulgaria, Latvia, Lithuania, Poland, Romania, Slovakia, Slovenia, Hungary, Croatia and the Czech Republic) recorded an average of 114% increase in GDP per capita, but in recent years traditional growth engines have started to lose power. In those ten countries the capital is 80% lower than in the largest EU countries, labor costs are rising slowly and labor productivity is lagging behind Western Europe. But the authors of the report believe that in each one of the next six years digitalization can add one percent to GDP growth in Bulgaria and increase the share of the digital economy from today's 5.2% to 16% of GDP. Although it still has a low share in Bulgaria, digital economy has been growing in the past five years about two and a half times faster than in five major EU markets and the country can actually claim to be a digital competitor. The combination of an open market and a focus on digitization has been a successful growth strategy for today's leaders in digital economy, and their common key features (size, importance of trade and openness) show that Bulgaria is well placed to walk a similar path of prosperity, according to McKinsey.

Together with the rest of the Central and Eastern Europe region, Bulgaria can use digitization as a helpful tool for the penetration of international value creation chains. But in order to realize this opportunity, it must involve all the responsible actors in digital transformation. Businesses needs to accelerate the adoption of digital tools to increase their productivity and profits, and the public sector - to play an important role in transformation through the use of digital technologies to deliver faster processes and services to companies and ordinary citizens. At the same time, people themselves become more active and invest in lifelong learning in order to be more flexible in their career development.

Politicians can support this process by encouraging adoption of new technologies by the public and private sectors, by enhancing the opportunities for digital innovation and by helping workers by creating mobility programs aimed at retraining or qualification upgrade, the McKinsey’s analysis also points out.

Editor: Stoimen Pavlov

English: Alexander Markov

More from category

Construction of Bulgaria-Greece gas interconnector begins under motto Development, Peace and Prosperity

The project for gas interconnector between Bulgaria and Greece, also known as IGB is of key significance for the two countries, as well as for the Balkans and Europe as a whole, because it would contribute to the diversification and the..

published on 5/23/19 2:24 PM

Inflation in Bulgaria reaches five-year high in April

In April 2019 consumer price index (CPI) in Bulgaria increased for the fourth consecutive month, data of the National Statistical Institute show. The average annual inflation for the period May 2018-April 2019 rose 3.3% year on year (as..

published on 5/17/19 1:28 PM

Bulgaria’s Competitive advantages in the Balkans

Bulgaria is a good place for investments compared to the other Balkan countries, the senior economist at the Institute of Market Economics Kaloyan Staykov told Radio Bulgaria. When investors make a comprehensive assessment of the country, they..

published on 5/9/19 1:54 PM