Winners and Losers: Structural Change in the Bulgarian Economy during the Last Decade

The period before Bulgaria’s accession to the EU was marked by high rate of economic growth. Both final consumption and fixed capital formation are factors that contributed to this growth. During that period a sizable net inflow of foreign capital was recorded, in the form of foreign direct investment and new debt accumulation of the private sector. These trends persisted throughout the first two years of the EU membership. The global economic crisis led to a sharp contraction of investment activity in Bulgaria, with the employment falling for four consecutive years. The impact of the crisis, combined with the effect of the common market resulted in considerable shifts in the structure of the economy. In 2015 the industry already had the highest share in the gross value added. The share of some manufacturing sectors in the exports of goods have risen by 500% or even 800% during the last decade. The role of export-oriented business services also significantly increased, becoming a key job creator in recent years.