Fitch: Bulgaria on track for Eurozone entry by 2026
Bulgaria is expected to meet the price stability criteria for joining the eurozone by early next year, according to a Fitch report.
Analysts predict that Sofia could request a new progress report from the European Commission in the first half of 2025, with a realistic target for euro adoption set for January 1, 2026. Although Bulgaria has met most convergence criteria, inflation remains the main obstacle, despite its steady downward trend.
Political instability, however, poses a significant risk to Bulgaria's eurozone ambitions, as ongoing crises could delay progress. Fitch maintains Bulgaria's BBB credit rating with a positive outlook, largely tied to potential eurozone membership. The agency also forecasts a widening budget deficit and rising public debt in the coming years due to increased public spending.
Salary growth tipped to continue
In 2024, salaries in Bulgaria increased by 7%, but companies are cautious about 2025, with plans to maintain current levels. The fastest salary growth continues in the IT and pharmaceutical sectors, while manufacturing and outsourced services remain below the market average. According to the Total Remuneration Survey (TRS Bulgaria) by Mercer Marsh Benefits, which analyzed data from 539 companies and more than 131,000 employees across 14 industries, the median gross salary is highest in IT, with management earning 9,207 levs, specialists 5,547 levs, and operational staff 2,637 levs.
In Sofia, salaries are 7.6% higher for management, 9.3% for specialists, and nearly 11% for operational roles compared to the national average. However, companies are expected to avoid sharp salary increases in 2025 due to economic uncertainty, according to senior consultant Stella Yulzari. She notes that while salary increases matched inflation in 2023, the forecast for 2025 is more conservative given current economic conditions.
BG REIT Index rises amidst structural challenges
The Bulgarian Stock Exchange's BG REIT index has seen over 10% growth in the last six months, outperforming Sofix's 5%.
However, challenges persist, including limited liquidity among many companies in the index and the absence of an index fund to enable passive investment. Modeled after Western REITs, BG REIT companies must distribute at least 90% of profits as dividends, attracting investors seeking stable income but limiting their financial leverage. The index's performance is largely driven by FNI Bulgaria and Advance Terafond, while other companies see little trading activity.
Despite positive developments, like a major property sale, structural issues continue to impact the index's long-term growth.
Fitch: Bulgaria on track for Eurozone entry by 2026
Bulgaria is expected to meet the price stability criteria for joining the eurozone by early next year, according to a Fitch report.
