Editing Economy of Bulgaria (section)

==History==
During the 17th and 18th century Bulgaria had a largely undeveloped industry with agriculture, crafts, and partly trade being the only developed industry sectors.

Bulgaria was one of the more dynamic industrial areas of the Ottoman Empire.<ref name=":0">{{Cite journal |last1=Ivanov |first1=Martin |last2=Kopsidis |first2=Michael |date=2022 |title=Industrialisation in a small grain economy during the First Globalisation: Bulgaria c . 1870–1910 |journal=The Economic History Review |volume=76 |pages=169–198 |language=en |doi=10.1111/ehr.13185 |s2cid=250288448 |issn=0013-0117|doi-access=free |hdl=10419/267891 |hdl-access=free }}</ref> Bulgaria experienced an economic boom in export-oriented textiles in the period 1815–65, even while the Ottoman Empire's economy was declining.<ref name=":0" /> Bulgaria had comparatively weak economic growth from the 1870s to World War I.<ref name=":0" /><ref name=":1">{{Cite journal |last1=Ivanov |first1=Martin |last2=Tooze |first2=Adam |date=2007 |title=Convergence or Decline on Europe's Southeastern Periphery? Agriculture, Population, and GNP in Bulgaria, 1892-1945 |url=https://www.jstor.org/stable/4501184 |journal=The Journal of Economic History |volume=67 |issue=3 |pages=672–704 |doi=10.1017/S0022050707000277 |jstor=4501184 |s2cid=154455978 |issn=0022-0507}}</ref> The Bulgarian export sector collapsed after Bulgarian independence in 1878.<ref name=":0" /> By 1903, industrial output in Bulgaria was far lower than in 1870.<ref name=":0" />

During the 1930s, the Bulgarian economy was described as an economy militarily bound to Germany. In the early 1940s, as Germany began to lose the Second World War, the Bulgarian economy suffered a decline.<ref>{{cite web|language=bg|url=http://valtcheva.com/index.php?option=com_content&task=view&id=37&Itemid=26|script-title=bg:България в началото на XX век. Икономическо развитие в началото на XX в.|trans-title=Bulgaria at the beginning of the 20th century. Economic development at the beginning of the XX century|publisher=Valtcheva}}{{page needed|date=September 2024}}</ref><ref>{{cite book|language=bg|author=[[Lyudmila Zhivkova]]|title=С априлско вдъхновение в борбата за мир и социализъм, за единство, творчество и красота: доклади, речи, статии и изказвания|trans-title=With April inspiration in the struggle for peace and socialism, for unity, creativity and beauty: reports, speeches, articles and speeches|volume=3|publisher=Partizdat|year=1983}}</ref><ref>{{cite book|language=bg|author=Давид Коен|script-title=bg:Военновременната икономика на България: 1939-1944|trans-title=The wartime economy of Bulgaria: 1939-1944|publisher= Sofia University St. Kliment Ohridski|year=2002}}</ref>

In the interwar period, there was considerable economic modernization in Bulgaria's agricultural sector, setting the conditions for rapid growth after World War II.<ref name=":1" />

=== Cold War period ===
During the Socialism era, Bulgarian economy continued to be industrialized, although free market trade substantially decreased, as private market initiatives became state-regulated. Still, the Bulgarian economy made significant overall progress in modernizing [[transport infrastructure|road infrastructure]], airline transportation, as well as developing the tourism sector by building tourist resorts along the Black Sea coast and the mountain regions.

From the end of World War II until the widespread change of regime in [[Eastern Europe]] in November 1989, the [[Bulgarian Communist Party]] (BCP) exerted complete economic, social and political control in Bulgaria. The party's ascent to power in 1944 had marked the beginning of economic change towards [[planned economy]]. During that time, Bulgaria followed the Soviet model of economic development more closely than any other member of the Eastern Bloc, while becoming one of the first members of [[Comecon]]. The new regime shifted the economy type from a predominantly agrarian one towards an [[industrial economy]], while encouraging the relocation of the labour force from the countryside to the cities, thus providing workers for the newly built large-scale industrial complexes. At the same time, the focus of Bulgarian international trade shifted from Central Europe to Eastern Europe and the USSR.<ref name=csecon>{{cite book|author=William Marsteller|chapter=The Economy|chapter-url=https://www.loc.gov/item/93010955/ |title=Bulgaria country study|editor=Glenn E. Curtis|publisher=[[Library of Congress]] [[Federal Research Division]] |date=June 1992}}</ref><ref>{{cite book | last=Димитрова | first=М. | title=Златните десятилетия на българската електроника | publisher=Книгоиздателска къща "Труд" | year=2008 | isbn=978-954-528-845-6 | url=https://books.google.com/books?id=jqJ6Ocql0XIC&pg=PA251 | language=bg }}</ref>

These new policies resulted in impressive initial rates of economic development.<ref name=csecon /> Bulgarian economy closely resembled that of the Soviet Union. Soviet-style centralised planning formed by consecutive five-year plan periods had more immediate benefits there compared to the other Eastern European states where it was first applied in the early 1950s.<ref>{{cite web|url=http://lcweb2.loc.gov/cgi-bin/query/r?frd/cstdy:@field(DOCID+bg0058)|title=Economic policies|access-date=3 March 2015}}</ref> Throughout the postwar period, economic progress was also substantially assisted by a level of internal political stability unseen in other Eastern European countries during the same period. That represented a change on the Bulgarian political scene, as political turbulence was common before BCP's ascent to power.<ref name=csecon/>

Nonetheless, beginning in the early 1960s, low capital and labour productivity, as well as expensive material inputs, plagued the Bulgarian economy. With disappointing rates of growth came a high degree of economic experimentation. This experimentation took place within the socialist economic framework, although never approaching a market-based economy.<ref name=csecon/>

In the late 1980s, continuing poor economic performance intensified economic hardship. By that time, the misdirection and irrationality of BCP economic policies had become quite clear.<ref name=csecon /> Bulgaria's economy contracted dramatically after 1987, shortly before Comecon, with which the Bulgarian economy had integrated closely, dissolved in 1991. On 10 November 1989, at the November plenum of BCP, [[Todor Zhivkov]] was dismissed from his long-held party leader and head of state positions. The communist regime gave way to democratic elections and government. Unlike the communist parties in most other Eastern European states, the BCP (changing its name to [[Bulgarian Socialist Party]]) retained power by winning the first free national elections in June 1990. That was made possible by changes in party leadership, programme, reduction of its power base and other moves which permitted economic re-orientation toward a market system. This difficult transition combined with political vagueness and unpreparedness of the Bulgarian people for social and economic changes led to dramatically worsening economic conditions during the early 1990s.<ref name=csecon/>

===1990–2000===
Economic performance declined dramatically at the beginning of the 1990s after the disbandment of the [[Comecon]] system and the loss of the [[Soviet Union|Soviet]] and Comecon market, to which the country had been entirely tied. Also, as a result of political unrest with the first attempts to re-establish a democratic political system and free [[market economy]] the [[standard of living]] fell by about 40%, and only started to stabilize significantly after 1998 after the fall of [[Jean Videnov]]'s socialist government. It regained pre-1989 levels by June 2004.

First signs of recovery showed in 1994 when [[Gross domestic product|GDP]] grew by 1.4%. This progress continued with a 2.5% rise in 1995. Inflation, which surged to 122% in 1994, fell to normal rates of 32.9% in 1995. During 1996, however, the economy collapsed during Jean Videnov's government. That was due to the [[Bulgarian Socialist Party]]'s inability to introduce vital economic reforms and failure to set legislative standards for banking and financial institutions, thus forcing an unstable banking system. All this led to an inflation rate of 311%, and the collapse of the [[Bulgarian lev|lev]]. In the spring 1997, the pro-reform [[United Democratic Forces]] coalition came to power with its ambitious economic reform package. The reforms included introduction of a currency board regime, which was agreed to with the [[International Monetary Fund]] and the [[World Bank]], and allowed the economy to stabilize. The 2000s saw a steady pace of growth and budget surpluses, but shaky inflation.

Successful foreign direct investment and successive governments have demonstrated a commitment to economic reforms and responsible fiscal planning that have contributed greatly to the Bulgarian economy, with a historical growth rate average of 6% a year. [[Corruption in Bulgaria|Corruption]] in the public administration and a weak judiciary have continued to be long-term problems, with presence of organized crime remaining very high.<ref>{{Cite book|title=Financial Times World Desk Reference|publisher=Dorling Kindersley Publishing, Inc.|year=2011|location=London, UK}}</ref>

Although politicians were giving warranties that the [[Great Recession|late-2000s recession]] would not hit Bulgaria, the economy suffered a 5.5% GDP decline in that period. Unemployment rose for at least five-quarters bringing Bulgaria's worst recession since the early 1990s. Still, economic circumstances were not too severe when compared to the rest of [[Europe]]. Future prospects are tied to the country's increasingly important integration with the European Union member states.

===Reforms of the 1990s and early 2000s===
Members of the government promised to move forward on cash and mass [[privatization]] upon taking office in January 1995 but were slow to act. United Nations sanctions against [[Federal Republic of Yugoslavia|Yugoslavia]] and [[Iraq sanctions|Iraq]] (1990–2003), two of the country's most significant trading partners, took a heavy toll on the Bulgarian economy. The first signs of recovery emerged in 1994 when the GDP grew and inflation fell. The first round of mass privatisation finally began in January 1996, and auctions began toward the end of that year. The second and third rounds were conducted in Spring 1997 under a new government. In July 1998, the UDF-led government and the IMF reached an agreement on a 3-year loan worth about $800 million, which replaced the 14-month stand-by agreement that expired in June 1998. The loan was used to develop financial markets, improve [[social safety net]] programmes, strengthen the tax system, reform agricultural and energy sectors, and further liberalise trade. The [[European Commission]], in its 2002 country report, recognised Bulgaria as a functioning market economy, acknowledging the progress made by Prime Minister [[Ivan Kostov]]'s government toward market-oriented reforms.

===Rebound from the February 1997 crisis===
In April 1997, the [[Union of Democratic Forces (Bulgaria)|Union of Democratic Forces]] (SDS) won pre-term parliamentary [[Bulgarian parliamentary election, 1997|elections]] and introduced an IMF currency board system which succeeded in stabilizing the economy. The triple digit inflation of 1996 and 1997 has given way to an official [[economic growth]], but forecasters predicted accelerated growth over the next several years. The government's structural reform program includes:
# privatization and, where appropriate, liquidation of state-owned enterprises (SOEs);
# liberalization of agricultural policies, including creating conditions for the development of a land market;
# reform of the country's social insurance programs; and
# reforms to strengthen contract enforcement and fight crime and corruption.
Despite reforms, weak control over privatization led many successful state enterprises to bankruptcy. The SDS government also failed to stop the growing negative account balance, which has since then continued to increase, reaching a negative of $12.65 billion in 2008.<ref>{{Cite web|url=http://www.bnb.bg/bnbweb/groups/public/documents/bnb_publication/publbnb_p_s_bop_20080812_en.pdf|title=BALANCE OF PAYMENTS OF BULGARIA January – June 2008 |archive-url=https://ghostarchive.org/archive/20221009/http://www.bnb.bg/bnbweb/groups/public/documents/bnb_publication/publbnb_p_s_bop_20080812_en.pdf |archive-date=2022-10-09 |url-status=live|website=bnb.bg|access-date=20 December 2018}}</ref> The [[Sakskoburggotski Government|government]] elected in [[Bulgarian parliamentary election, 2001|2001]] pledged to maintain the fundamental economic policy objectives adopted by its predecessor in 1997, specifically: retaining the Currency Board, implementing sound financial policies, accelerating [[privatisation]], and pursuing structural reforms. Both governments failed to implement sound social policies.

The economy really took off between 2003 and 2008 and growth figures quickly shot up, fluctuating between figures as high as 6.6% (2004) and 5.0% (2003). Even in the last pre-crisis year, 2008, the Bulgarian economy was growing rapidly at 6.0%, despite significantly slowing down in the last quarter.<ref>{{cite web|agency=Associated Press |first=|url=http://www.iht.com/articles/ap/2007/06/19/business/EU-FIN-ECO-Bulgaria-Growth.php |title=Bulgaria's economy grew by 6.2 percent on year in 1Q - International Herald Tribune |publisher=Iht.com |access-date=2 January 2009}}</ref>

===Part of the European Union===
{{See also|2007 enlargement of the European Union|Bulgaria and the euro}}
On 1 January 2007, Bulgaria entered the [[European Union]]. This led to some immediate international trade liberalization, but there was no shock to the economy. The government ran annual surpluses of above 3%.{{when|date=February 2014}} This fact, together with annual GDP growth of above 5%, has brought the government indebtedness to 22.8% of GDP in 2006 from 67.3% five years earlier.<ref name="The Hard Road Towards the Euro, Capital Newspaper">{{cite web
  | title =The Hard Road Towards the Euro
  | publisher =Capital
  | date =13 April 2007
| url =http://www.capital.bg/politika_i_ikonomika/bulgaria/2007/04/13/330539_trudniiat_put_kum_evroto/
  | archive-url =https://web.archive.org/web/20110823233548/http://www.capital.bg/politika_i_ikonomika/bulgaria/2007/04/13/330539_trudniiat_put_kum_evroto/
  | archive-date =23 August 2011
| url-status =dead
  }}</ref> This is to be contrasted with enormous [[List of countries by current account balance|current account deficits]]. Low [[interest rate]]s guaranteed availability of funds for investment and consumption. For example, a boom in the [[real estate market]] started around 2003. At the same time annual [[inflation]] in the economy was variable and during the last five years (2003–2007) has seen a low of 2.3% and high of 7.3%.<ref name="TInflation Statistics, Stat.bg">{{cite web|title=Inflation Statistics |publisher=Stat.bg |date=5 May 2007 |url=http://www.stat.bg/indicator.html?lang=1&id=143&per=3 |url-status=dead |archive-url=https://web.archive.org/web/20070929161635/http://www.stat.bg/indicator.html?lang=1&id=143&per=3 |archive-date=29 September 2007 }}</ref> Most importantly, this poses a threat to the country's accession to the [[Eurozone]]. The [[Bulgarian government]] originally planned to adopt the [[Euro]] no sooner than 2015. Although Bulgaria will have to adopt the euro as a condition to membership, plans have since been postponed for better economic times. From a political point of view, there is a trade-off between Bulgaria's economic growth and the stability required for early accession to the [[monetary union]]. Bulgaria's per-capita [[Purchasing power parity|PPP]] [[GDP]] is about 70% of the [[2007 enlargement of the European Union|EU27]] average (2025), while the country's [[nominal GDP]] per capita is about 43% of the EU27 average (2021). However, Bulgaria ranks 38th (2015) in the [[Ease of Doing Business Index|Ease of Doing Business rank list]], higher than most other Eastern European states,<ref>{{cite web|url=http://www.doingbusiness.org/rankings |title=Ranking of economies - Doing Business - World Bank Group |access-date=3 March 2015 |url-status=dead |archive-url=https://web.archive.org/web/20150206025936/http://www.doingbusiness.org/rankings |archive-date=6 February 2015}}</ref> and 40th (2012) in the [[Economic Freedom of the World]] index, outperforming Belgium, Spain, Poland, Hungary, Portugal. Bulgaria also has the lowest personal and corporate income tax rates in the EU,<ref>{{cite web|url=http://www.novinite.com/view_news.php?id=122395|title=Ireland Stays in Bulgaria-Led Club of Low Corporate Taxes, Ups Income Levy|publisher=Novinite|date=22 November 2010}}</ref><ref>{{cite web|language=it|url=http://www.repubblica.it/supplementi/af/2011/09/26/villaggioglobale/012ciproz.html |title=I capitali greci si rifugiano a Cipro ma le aziende preferiscono la Bulgaria|trans-title=Greek Capital Takes Refuge in Cyprus but Companies Prefer Bulgaria|publisher=La Repubblica|date=26 September 2011}}{{dead link|date=May 2016|bot=medic}}{{cbignore|bot=medic}}</ref><ref>{{cite web|url=http://www.tax-news.com/news/Bulgaria_Keeps_Faith_In_Low_Taxes____46353.html|title=Bulgaria Keeps Faith In Low Taxes|url-status=usurped|archive-url=https://web.archive.org/web/20200806014212/https://www.tax-news.com/news/Bulgaria_Keeps_Faith_In_Low_Taxes____46353.html |archive-date=6 August 2020 |publisher=Tax-News.com|date= 15 November 2010}}</ref> as well as the second lowest [[public debt]] of all European Union member states at 16.2% of GDP in 2010.<ref>{{cite web|url=http://edition.cnn.com/2011/BUSINESS/06/19/europe.debt.explainer/index.html |archive-url=https://web.archive.org/web/20110622001026/http://edition.cnn.com/2011/BUSINESS/06/19/europe.debt.explainer/index.html |url-status=dead |archive-date=22 June 2011 |title=European public debt at a glance|publisher=CNN|date=21 July 2011}}</ref>

===Great Recession===
[[File:Economic Growth in Bulgaria.gif|right|thumb|GDP Growth (green vs. red) and Unemployment (blue) since 2001]]
[[File:Public and Private Foreign Debt for Bulgaria.gif|right|thumb|Public (dark red) vs. private (light red) foreign debt (red line)]]
The country suffered a difficult start to 2009, after gas supplies were cut in the [[Russia–Ukraine gas disputes#Dispute of 2008–2009|Russia-Ukraine gas dispute]]. Industrial output suffered, as well as public services, exposing Bulgaria's overdependence on Russian raw materials.
The [[Great Recession]] led to a decline in growth and employment by the last quarter of 2008. The real estate market, although not plummeting, ground to a halt and growth was significantly lower in the short-to-medium run.

During 2009, the grim forecasts for the effects of the [[Great Recession]] on the Bulgarian economy largely materialized. Although suffering less than the worst-hit countries, Bulgaria recorded its worst economic results since the 1997 meltdown. GDP shrank by around 5% and unemployment jumped. Consumer spending and foreign investment dropped dramatically and depressed growth in 2010 to 0.3%. Unemployment remains consistently high at around 10%.

===New government and fiscal discipline===
The government of [[Boyko Borisov]] elected in 2009 undertook steps to restore economic growth, while attempting to maintain a strict financial policy.<ref>{{cite web |url=http://www.novinite.com/view_news.php?id=114429 |title=Bulgaria Govt Backs 80% of Unions, Employers Anti-Crisis Plan - Novinite.com - Sofia News Agency |date=21 March 2010 | publisher =novinite.com | access-date =16 April 2010}}</ref> The fiscal discipline set by Finance Minister Djankov proved successful and together with reduced budget spending it placed Bulgarian economy on the stage of steadily though slowly growing in the midst of world crisis. On 1 December 2009, [[Standard & Poor's]] upgraded Bulgaria's investment outlook from "negative" to "stable," which made Bulgaria the only country in the [[European Union]] to receive a positive upgrade that year.<ref>{{cite web|url=http://www.novinite.com/view_news.php?id=110627|title=Standard & Poor's Upgrades Bulgaria's Outlook to Stable|access-date=3 March 2015}}</ref> In January 2010 Moody's followed with an upgrade of its rating perspective from "stable" to "positive."

Bulgaria was expected to join the Eurozone in 2013 but after the rise of some instability in the zone Bulgaria is withholding its positions towards the Euro, combining positive and realistic attitudes.<ref>{{cite web|url=http://bnr.bg/sites/en/Lifestyle/BGEU/Pages/2607BulgariaputsoffEurozonemembershipfor2015.aspx |title=Bulgaria puts off Eurozone membership for 2015|url-status=live|archive-url=https://web.archive.org/web/20120329104921/http://bnr.bg/sites/en/Lifestyle/BGEU/Pages/2607BulgariaputsoffEurozonemembershipfor2015.aspx |archive-date=29 March 2012|publisher=[[Bulgarian National Radio|BNR]]|date=26 July 2011}}</ref><ref>{{cite web|url=https://www.bloomberg.com/news/2011-07-25/bulgarian-euro-not-a-hot-topic-finance-minister-djankov-says.html|title=Euro 'Not a Hot Topic,' Bulgaria's Djankov Says|publisher=[[Bloomberg L.P.|Bloomberg]]|date=25 July 2011}}</ref> The 2012 Transatlantic Trends poll found that 72 percent of Bulgarians did not approve of the economic policy pursued by the government of the (then) ruling center-right GERB party and Prime Minister Boyko Borisov.<ref>{{cite web|url=http://www.balkaninsight.com/en/article/bulgarians-don-t-approve-of-economic-policy|title=Bulgarians 'Don't Approve' of Economic Policy|date=12 September 2012|access-date=3 March 2015}}</ref> In 2024 Bulgaria is making final preparations to adopt the Euro and depending on the inflation rate during the year, the country has a chance of joining the Eurozone in 2025.<ref>{{cite web|url=https://bnr.bg/en/post/101953932/finance-minister-assen-vassilev-believes-bulgaria-will-be-able-to-adopt-the-euro-in-2025-at-3-inflation|title=Finance Minister Assen Vassilev believes Bulgaria will be able to adopt the euro in 2025 at 3% inflation|date=24 February 2024}}</ref>