Bulgarian economy registers upsurge, yet unevenly distributed over different regions

There has been an upsurge in the economy in every region of Bulgaria, the effects of the Covid crisis have been overcome, tourism has fully recovered, which is evident in Bulgarian seaside regions and spa resorts - this is the conclusion that is drawn from the data in the latest analysis of the Institute for Market Economics - "Regional Profiles. Development Indicators 2024". Based on 75 indicators, the economic and social situation of all 28 regions in Bulgaria is measured.

The leading economic sector in the country is services, with Sofia accounting for 80% of businesses. They are followed by the IT sector. The average life expectancy is the highest in Kardzhali district ( Southern Bulgaria) and in the capital city - 75.4 years. At the other end of the scale is Vidin District (Northwest Bulgaria), where it is just over 69 years. The average pension is also highest in Sofia - BGN 1,040 (EUR 521), while in Kardzhali it is only BGN 656 (EUR 329), which shows the great inequalities in the different regions of the country.

According to the annual economic comparison of the regions, the highest taxes are paid in Varna, Burgas, Sofia, Ruse and Veliko Tarnovo, while Montana is the municipality with the lowest local taxes. However, for the first time the share that the capital contributes to the GDP of the country has decreased - from 43% last year, it is now 41%. Economists attribute this to higher energy prices paid by businesses. Silistra and Dobrich remain the regions with the lowest growth and this further widens the differences in income and quality of life in the compared districts, the authors of the report point out.

The trends are better, but this does not apply equally to the regions, Zornitsa Slavova, senior expert at IME, pointed out to Radio Bulgaria.

"We also see growth in the faster developing cities, such as Stara Zagora, Plovdiv, Varna, while at the other pole are Vidin, Silistra, Montana, Dobrich, where incomes are growing much more slowly, including the standard of living for people. The labour market is clearly at its peak there as well, but this is having a lesser economic impact because of an ageing population. There is not a high proportion of people of working age and there is not much investment. Investment is booming in Sofia district, which acts as the industrial periphery of the capital. Sofia district has the highest GDP growth per capita and leads in output per employee in the industry. Coastal cities Varna and Burgas develop mainly thanks to tourism. There are also a lot of people with higher education, this determines the high economic activity and therefore a developed labour market. But the contribution of employment in tourism remains the strongest."

Regions in Bulgaria are increasing their population despite the negative natural growth.

Bulgaria's population decreases by more than 50,000 people per year

This year, each of the districts has increased its population, i.e. has a positive mechanical growth, which is reported as a positive trend in the IME report, which has been published for 13 years now. There is a trend of attracting Bulgarians from abroad and even foreigners, but at the same time, the natural growth everywhere is negative. Sofia attracts people from all over the country because of the better labour market and twice the average salaries for the country. Kardzhali and the capital are the districts with the highest mechanical population growth, with Kardzhali district seeing the return of migrants from Turkey, the IME report also states.

"Fewer children are born than people die - population decline is a problem. In less developed economies, labour capital is the most important for investments. We see an increase in investments here, even in Sofia unemployment is very small, it is as much as people change jobs, but the problems with structural unemployment remain.

Education is also part of the regional profiles - it plays a key role in some regions and has a strong negative impact on investments and businesses. It is not always mandatory to have university graduates, because they are more likely to be associated with high-tech production, and in fact, industry is the one that plays a leading role in smaller regions - for example, Vratsa, Stara Zagora, Pazardzhik. But there is also a population there with a fairly low level of education. Here we also report a high share of poor grades from the external assessment of school pupils in Bulgarian language and mathematics, and we cannot help but take into account the large discrepancy between vocational education and the profile of local economies.

An example is the increase in academic admissions in specialties related to the IT sector. Yes, but it is developed only in Sofia, Varna, Plovdiv. And for example, these specialists from the Smolyan region have to find work in another area if they want to develop in their specialty. And one more thing – the industry around Plovdiv and the mining industry in the Srednogorie region provide well-being to entire municipalities. There, salaries are better, more jobs are created, and there is more investment in these places. The industry as a whole pulls the economy of the municipalities forward, and this is also a driver for the economy of entire regions.

The country's advantage is still the low taxes - corporate and income. However, the mantra of cheap labour no longer works in attracting investors, so the question remains what to do with the available human capital:

"In Bulgaria, first of all, there is no focus on qualification and further training. And secondly, new Eurostat data show that lifelong learning in Bulgaria is the lowest in the entire EU – 1.4% of people have completed some kind of training course, for comparison in the Nordic countries it is around 30%. Without qualification and requalification and given the structural unemployment in the country, it will be difficult for us to attract investments."

The group of economically inactive and discouraged Bulgarians continues to be large, and it is precisely for them that requalification courses and career guidance consultations should be provided, but this is not being done, despite several strategies written in this direction, Zornitsa Slavova concludes.

Read also:

Bulgaria without Bulgarians - is the country's demographic collapse irreversible?

Photos: Institute for Market Economics, BGNES, Pixabay

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Bulgarian economy registers upsurge, yet unevenly distributed over different regions

Negative natural population growth continues, tourism and services create wealth in Sofia and resort towns: analysis by the Institute for Market Economics

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