Bulgaria is set to witness wages outpacing inflation at a two-to-one ratio in 2024, according to Allianz Trade's latest report. Anticipating a 9% growth in wages compared to an expected 4% inflation, the report indicates a slowdown from the 13.5% wage growth projected for 2023. Despite this deceleration, wages are poised to comfortably surpass rising prices.

Consumer spending growth is predicted to decline to 2% in 2024, influenced by more conservative household spending due to smaller wage hikes, increasing interest rates, and less favorable credit conditions. Allianz Trade's report also forecasts moderate GDP growth of 2% in 2024 and a slight uptick to 2.5% in 2025.

Public spending is highlighted as a key driver for economic growth, set to increase by nearly 4% this year. Investment activity is expected to recover over the next two years, fueled by public investment, including projects funded by Next Generation EU. Investment growth is projected at 4.2% in 2024, with zero growth in 2023.

While Bulgarian exports are anticipated to recover gradually, with a growth forecast of 4.2% in 2024, imports are expected to rebound more convincingly. This shift is predicted to result in a negative contribution to net trade.

The country's business environment is deemed adequate but faces unresolved challenges, including corruption, judiciary efficiency, government instability, public dissatisfaction with living standards, and vulnerability to external economic shocks due to high export dependence.

Manfred Stamer, Senior Economist for Emerging Europe at Allianz Trade, predicts Bulgaria's potential entry into the eurozone in 2025 at the earliest.