The Organisation for Economic Co-operation and Development (OECD) expects Bulgaria’s economic growth to slow to 2.5% in 2026 and 2.3% in 2027 amid higher inflation, rising energy costs and weaker consumer spending. In its previous forecast, published in December 2025, the Paris-based organisation projected growth of 2.6% in 2026 and 2.4% in 2027, making the downward revision relatively modest.
According to the OECD’s latest Economic Outlook report, published today, June 3, higher energy prices resulting from the conflict in the Middle East will reduce real incomes and weigh on domestic demand in Bulgaria. Consumption growth is expected to moderate as wage increases and social transfers also lose momentum.
The OECD forecasts that investment in 2026 will be supported primarily by public expenditure and European Union funding, before private investment gradually recovers as political and geopolitical uncertainty eases.
The organisation warns that higher energy prices create a risk that inflation could remain persistently elevated. Average annual inflation is expected to reach 4.3% in 2026 before slowing to 3.4% in 2027.
According to the OECD, Bulgaria remains vulnerable to external energy shocks because of the relatively high share of energy costs in the economy. The conflict in the Middle East has already led to higher fuel and wholesale electricity prices, although the impact remains less severe than during the energy crisis following the war in Ukraine.
The organisation reports that the government has responded with support measures for households and businesses, including subsidies for low-income households, relief for the transport sector and compensation for energy-intensive companies.
The analysis also points out that borrowing costs for households and businesses have declined slightly following Bulgaria’s accession to the eurozone in January 2026.
However, the OECD warns that the budget deficit has exceeded 3% of gross domestic product due to rising spending on healthcare and social services, higher public-sector wages and increased investment expenditure.
The organisation recommends a credible medium-term fiscal consolidation strategy to reduce the risk of economic overheating and ensure the sustainability of public finances in the face of population ageing, higher defence spending and the green transition.
The report also highlights the need for structural reforms in the energy sector, including accelerating renewable energy projects, expanding electricity transmission infrastructure and investing in energy storage capacity.
Middle East Conflict Emerges as Key Risk to Global Growth and Inflation
The escalating conflict in the Middle East has become the key factor shaping global economic prospects, triggering an energy shock that is intensifying inflationary pressures and weighing on economic growth, the OECD says in its Economic Outlook report.
According to the organisation, rising energy prices and higher costs for key commodities from the Gulf region are already affecting inflation, real incomes and global economic activity.
Given the uncertainty surrounding the conflict’s development, the OECD has outlined two scenarios for the global economy.
The first assumes a temporary disruption, with energy production and trade gradually recovering from mid-2026 and market turbulence easing over time.
The second envisages prolonged disruption, with restrictions on energy production and exports from the region continuing into 2027, leading to persistently high energy prices, risks of supply shortages and tighter global financial conditions.
"The global economy entered 2026 with robust momentum, but the outlook has weakened significantly since the start of the conflict in the Middle East, with effects likely to be felt for some time. The longer the disruptions last, the larger the economic and social costs become," OECD Secretary-General Matthias Cormann said.
He added that any fiscal support measures should be targeted at the most vulnerable households and businesses and remain temporary in order to avoid further increases in public debt and preserve incentives to reduce energy consumption.
Under the temporary disruption scenario, the OECD expects global growth to slow from 3.4% in 2025 to 2.8% in 2026 before accelerating to 3.1% in 2027.
For the United States, the organisation forecasts growth of 2.0% in 2026 and 1.8% in 2027. The eurozone economy is expected to expand by 0.8% in 2026 and 1.2% in 2027.
China’s growth is forecast to slow to 4.5% in 2026 and 4.3% in 2027.
Under the prolonged disruption scenario, global growth would weaken much more sharply, falling to 2.1% in 2026 and 1.8% in 2027.
The OECD warns that such an outcome would leave lasting consequences for many economies, particularly in Asia, Europe and developing countries that are heavily dependent on energy and food imports.
According to the analysis, inflationary pressures are expected to continue rising across both advanced and emerging economies.
Under the temporary disruption scenario, inflation across the G20 economies is projected to reach 4.0% in 2026, up from 3.4% in 2025, before easing to 3.1% in 2027.
In the prolonged disruption scenario, inflation would accelerate more sharply due to persistently high energy and food prices.
The OECD notes that many countries have already introduced measures to mitigate the impact of higher energy costs, but warns that support should be well targeted, temporary and should not undermine incentives for energy efficiency.
Source: BTA
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