Embed This Data
- GDP (PPP):
- $105.0 billion
- 0.9% growth
- -0.4% 5-year compound annual growth
- $14,499 per capita
- Inflation (CPI):
- FDI Inflow:
Bulgaria’s economic freedom score is 66.8, making its economy the 55th freest in the 2015 Index. Its overall score is 1.1 points better than last year due to improvements in investment freedom, freedom from corruption, and monetary freedom that outweigh declines in business freedom and labor freedom. Bulgaria is ranked 26th out of 43 countries in the Europe region, and its overall score is above the world average but below the regional average.
Over the past five years, economic freedom in Bulgaria has advanced by nearly 2.0 points, led by a more open investment environment, improvements in the fiscal outlook, diminished perceptions of corruption, and low inflation. Gains were recorded in six of the 10 factors, led by investment and monetary freedom, which advanced 10 points and 7.7 points, respectively.
Bulgaria has taken steps to control budget deficits and public debt more effectively, but further reform is necessary to achieve broad-based economic freedom and growth. In particular, institutional reforms must promote judicial independence and tackle corruption in order to solidify the foundations of economic freedom and ensure progress toward greater prosperity.
Bulgaria joined the European Union in January 2007. Former Finance Minister Plamen Oresharski became prime minister in May 2013 at the head of a Socialist Party–led coalition. In June 2014, amid protests against low standards of living, high energy costs, and corruption, President Rosen Plevneliev announced that he was dissolving Parliament because of banking instability. Tourism, information technology and telecommunications, agriculture, pharmaceuticals, and textiles are leading industries. Despite EU protests, Bulgaria has refused to stop work on its section of Russia’s South Stream pipeline and the Azerbaijan/Turkey-backed Trans-Anatolian Natural Gas pipeline. Sluggishness in the economy has been exacerbated by the EU crisis and internal instability. Bulgaria remains one of the EU’s poorest countries. Prospects for adoption of the euro have declined.
Corrupt and inconsistent public administration, a weak judiciary, and organized crime continue to hamper Bulgaria’s economic prospects. Human trafficking, narcotics, and contraband smuggling contribute to corruption. In May 2014, the parliament approved a five-year residency requirement for foreign purchase of agricultural land. The judicial system does not enforce property rights effectively.
Bulgaria’s top individual and corporate income tax rates are 10 percent. Other taxes include a value-added tax and an estate tax. Total tax revenue equaled 26.5 percent of gross domestic product in the most recent year. Public expenditures account for 34.4 percent of GDP, and public debt remains under 18 percent of the size of the economy.
The overall regulatory framework supports entrepreneurial activity. Launching a business is less time-consuming, and the minimum capital requirement has been eliminated. However, obtaining licenses still takes more than three months. The labor market needs further reform. Although most prices are determined by market forces, rising and unevenly distributed agricultural subsidies from the European Union have distorted land values.
EU members have a 1.0 percent average tariff rate. Although some non-tariff barriers exist, the EU is relatively open to external trade. Bulgaria’s regulatory and court systems can be a hurdle for foreign investors. The financial sector, dominated by banks, has benefited from increased competition. A June 2014 run on deposits at Corpbank prompted the central bank to seize control of the bank and freeze its operations.