In the last seven years, Bulgaria has made impressive progress in stabilization, growth, and poverty reduction. Since 1997 Bulgaria has been implementing a comprehensive stabilization and structural reform program anchored in its process for EU accession. As a result, Bulgaria achieved, and has maintained macroeconomic stability since 1999; growth has ranged between 4 and 5 percent per year, contributing to increasing per capita income, at PPP, from US$5,508 in 1998 to US$8,260 in 2004; and unemployment has started to decline. The share o f the private sector in the economy had increased to around 75 percent by 2004, and trade in goods and services relative to GDP has expanded to above 100 percent since 2002. FDI flows have increased to an average o f 7 percent o f GDP per year since 1998 compared to an average o f 1 percent o f GDP in the first nine years o f transition. Investors’ confidence has improved over time, both domestically and externally, with spreads o f Brady and Euro bonds declining since 2002. During the summer o f 2004, S&P and Fitch upgraded Bulgaria’s longterm foreign currency debt to investment grade rating. Taken all together, Bulgaria has the unique opportunity o f the momentum o f i t s economic progress to deepen its economic transformation so as to accelerate real convergence.
The core reform agenda for Bulgaria is centered on achieving successful integration with the EU and the global markets. Bulgaria should build on its achievements to date to accelerate real convergence by expanding efficiency gains and competitiveness more broadly across the economy. To this end, Bulgaria needs to continue to act on several fronts as it has done since 1998 and to implement a core agenda o f reforms that will deepen trade integration with the EU and global markets. For Bulgaria to move towards potential output growth and become more competitive, policies and economic restructuring need to focus on
achieving higher economic efficiency and productivity supported by a fiscally sustainable and well targeted social protection system.
Going forward, a cohesive structural reform agenda supported by disciplined macroeconomic policies is central if Bulgaria is to translate EU accession into sustained improvement in standards of living for its population. Bulgaria has gained considerable
expertise in recent years in managing its economy under a hard peg. Best of all, it has demonstrated a willingness to subject its fiscal policy to the exigencies of the currency board and a flexibility to do so that will hold in good stead as it integrates in European monetary arrangements. Still, these challenges underscore the centrality of implementing the structural
reforms to get the Bulgarian economy in sync with the rest o f the currency area and able to withstand common external shocks. Reforms to substantially enhance labor market adjustment, to improve competition in the domestic markets, to enhance the
dependability of contracts and to upgrade skills and transport network, will help achieve that, while accelerating real convergence. These are central for Bulgaria to translate EU accession into sustained improvement in standards of living for its population.
More facts and figures about the Bulgarian Economy here:
Foreign Direct Investment inflow in Bulgaria by country and by year 1992 – 2006 (USD m)
Foreign Direct Investment inflows in Bulgaria by year 1992 – 2006 (USD m)
Foreign Direct Investment in Bulgaria by sectors 1998 – 2006 (USD m)