Bulgaria

Strong domestic demand has limited the economic contraction so far, but slow vaccination efforts could extend the expected economic recovery. After a comparatively shallow contraction last year, S&P Global Ratings expects muted external demand will delay some of the economic recovery into 2022. In the medium term, EU fund inflows, including from the Next Generation EU (NGEU) instrument, will support growth; Bulgaria is eligible for total grants of over 50% of GDP until 2027. The recent election produced a fragmented parliament from which no viable coalition emerged; it remains uncertain whether the July snap elections will improve the chance of government formation significantly. Fiscal deficits will remain low in 2021, which will enable swift consolidation thereafter, supported by EU fund

...Institutional and economic profile Flexibility and performance profile Strong domestic demand has limited the economic contraction so far, but slow vaccination efforts could extend the expected economic recovery. + After a comparatively shallow contraction last year, S&P Global Ratings expects muted external demand will delay some of the economic recovery into 2022. + In the medium term, EU fund inflows, including from the Next Generation EU (NGEU) instrument, will support growth; Bulgaria is eligible for total grants of over 50% of GDP until 2027. + The recent election produced a fragmented parliament from which no viable coalition emerged; it remains uncertain whether the July snap elections will improve the chance of government formation significantly. Fiscal deficits will remain low in 2021, which will enable swift consolidation thereafter, supported by EU fund inflows. + Narrow fiscal deficits mean Bulgaria's government debt burden will remain low. + The Bulgarian lev (BGN) was included...

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