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Date stated in the original: 18 December 2015. Review note: 6 November 2026.

The text of the original article

S&P rating for Bulgaria — image from the original website

The rating agency Standard & Poor's has confirmed its rating for Bulgaria

“In the absence of the political uncertainty that characterised recent years, and combined with lower energy prices, falling unemployment and faster absorption of EU funds, domestic demand continued to strengthen. Demand for Bulgarian exports was also strong, with export volumes rising by almost 8% in the first three quarters of 2015. These factors contributed to real GDP growth of 3% year on year in the first nine months of the year. We have therefore revised our estimate of real GDP growth in 2015 upwards to 3%, compared with our previous estimate of 1.5%,” S&P explained.

However, the agency considers that ‘the outlook for 2016–2018 is somewhat weaker’ because a new EU budget cycle is beginning, with EU funding making a substantial contribution to growth.

“The strength of the recovery, despite high public spending, remains uncertain, as domestic demand has struggled to gain momentum in the years following the 2008–2009 global financial crisis. Although nominal GDP denominated in Bulgarian lev (BGN) is estimated to be almost 20% above its 2008 peak, we expect domestic demand to exceed its 2008 level only in 2016.

“The banking sector is also vulnerable to external factors, given the strong presence of Greek subsidiaries, which together account for approximately one fifth of the sector’s assets,” S&P notes.

The outlook for Bulgaria is stable and based on “the balance between economic and fiscal risks ... from potential financial-sector vulnerabilities and the fiscal space provided by still-low general government debt”.

For its rating to be upgraded, Bulgaria must effectively address “governance issues, thereby strengthening its growth potential and attracting more foreign direct investment into tradable sectors”, or ensure that the economy expands sufficiently to enable faster consolidation of public finances.

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