Investment, Credit Expansion and a Resilient Growth Path
This analysis is based on the Eurobank Research – Global & Regional Monthly Report (February 2026).
The report highlights the current macroeconomic outlook for Bulgaria, focusing on investment dynamics, credit expansion and the resilience of economic growth within the broader regional and global economic environment.
Key indicators from the report:
- Inflation moderation — 2.3% YoY (Jan) vs 3.5% (Dec)
- Construction growth — +46.1% YoY in Q4
- Housing credit — +27.9% YoY
- Corporate lending — +10.3% YoY in December
- External balance — deficit widened by 154.6% YoY
Overall, Bulgaria’s economic outlook currently presents mixed signals, combining resilient domestic investment activity and strong credit growth with emerging macroeconomic pressures. While several indicators point to continued economic momentum, others highlight growing external imbalances and potential vulnerabilities in the external sector.
Fig. 1 Building activity, a major fixed investment driver, grew strong in Q4
Fig 2 Wholesale-retail trade volume growth is tracking inflation rather than moving counter-cyclically
Charts reproduced from Eurobank Research.
Based on Eurostat and Eurobank Research data.
Strong construction activity and investment momentum
Investment continues to be one of the main drivers of economic activity in Bulgaria. The construction sector, which contributed significantly to GDP growth during the first three quarters of 2025, maintained strong momentum toward the end of the year.
According to the report, construction activity expanded by 46.1% year-on-year in the fourth quarter, compared with 24.4% in the previous quarter. While part of this acceleration reflects favourable base effects, it also indicates sustained demand in residential construction and infrastructure investment supported by European funding programmes.
Housing credit growth has played an important role in this trend. Mortgage lending increased by 27.9% year-on-year in the fourth quarter, reflecting continued demand in the residential property market and strong borrowing activity among households.
Credit expansion supporting business activity
Corporate lending has also strengthened, supporting investment activity across several sectors of the economy. Business credit recorded 10.3% year-on-year growth in December, marking the first double-digit expansion since 2009. Over the fourth quarter of 2025, corporate lending grew on average by 8.5% year-on-year, suggesting improved access to financing for businesses.
Looking ahead, investment activity is expected to receive additional support from the disbursement of two tranches under the EU Recovery and Resilience Facility (RRF) at the end of 2025, as well as increased defence-related spending under the SAFE programme.
External sector pressures
Despite strong domestic activity, the report also highlights increasing pressure on Bulgaria’s external balance. Robust consumption and investment demand have led to a notable rise in imports.
As a result, the combined goods and services deficit widened by 154.6% year-on-year in November, reflecting the deterioration of the goods balance driven largely by stronger imports.
If this trend persists, external sector dynamics may act as a drag on economic growth in 2026, particularly if export growth does not keep pace with rising domestic demand.
Conclusion
Overall, Bulgaria’s economic outlook presents a balance between strong domestic activity and emerging macroeconomic challenges. While investment growth, expanding credit and moderating inflation provide supportive conditions for economic activity, widening external imbalances and political uncertainty remain important factors shaping the country’s economic trajectory.
Source:
Eurobank Research – Global & Regional Monthly Report (February 2026)
