Belgian KBC raised its forecast for Bulgaria’s average annual inflation in 2026 to 5%, up from 4.7% in its August forecast. Its projection for 2027 has also been revised upwards by 0.3 percentage points, to 3.8% from 3.5%. At the same time, its forecasts for GDP growth remain unchanged at 2.6% this year and 2.4% in 2027, according to the group’s September economic outlook.
The reported quarterly growth of 0.7% in the Bulgarian economy was broadly in line with analysts’ expectations and supports their forecast for 2026. The expected slowdown in 2027 had already been factored into KBC’s August forecast.
The more cautious inflation outlook is linked to higher fuel and transport costs. According to the latest outlook, annual inflation in Bulgaria accelerated to 5.1% in August, while food price developments remained relatively favourable.
Analysts expect inflation to slow in 2027 as the effects of recent price shocks and ongoing inflationary pressures ease. Drought, however, poses additional risks. According to the report, it has led to a reduction of around 120 megawatts in the capacity of Bulgaria’s Kozloduy Nuclear Power Plant, contributing to upward pressure on regional electricity prices.
In its August forecast, KBC highlighted the adoption of the euro and early signs of stronger foreign direct investment inflows as factors supporting economic growth. At the time, analysts also warned of supply-side constraints: in July, 33.3% of industrial companies cited labour shortages as an obstacle to their operations, while hourly labour costs rose by 13.4% year on year in the first quarter.
Globally, KBC identifies the continued escalation and expansion of the conflict in the Middle East as the main risk. As of September 14, natural gas prices rose to EUR 83 per megawatt-hour, from EUR 43 at the end of June, while oil prices climbed to USD 107 per barrel, from USD 73. The baseline scenario assumes a gradual normalization of energy prices, but a more prolonged conflict would worsen the economic outlook.
KBC raised its forecast for euro area growth in 2026 from 0.7% to 0.9%, citing upward revisions to second-quarter data. For 2027, its growth forecast has been cut from 1.1% to 0.9%. Its inflation forecast has been raised from 2.8% to 3% for this year and from 1.8% to 2.1% for next year. Analysts also expect the European Central Bank to raise interest rates twice more.
KBC Raises Forecast for Bulgaria’s Average Annual Inflation in 2026 to 5%, GDP Growth Remains Unchanged at 2.6% THE NEWS FROM BULGARIA – NEWS AGENCY 2009-2025 2026-09-21 14:29:04
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BULGARIA NEWS – NEWS AGENCY 2009–2026 2026-09-21 14:29:04