Economy
Bulgaria became a member of the European Union
in 2007; the World Bank classifies it as an "Upper-middle-income
economy" .
Bulgaria has experienced rapid economic growth in recent years.
The country is still the poorest member state of the EU, but standards of
living are rising. Bulgaria has tamed inflation since the deep economic crisis
in 1996-1997, but latest figures show an increase in the inflation-rate to 12.5%
for 2007. Unemployment declined from more than 17% in the mid 1990s to nearly
10% in 2007, but the unemployment-rate in some rural areas continues in high
double-digits. An Industry Watch report
predicts inflation rate of 5% for 2008, with unemployment dropping further to a
record low of 6.5%. Due to its positive economic profile, pundits predict that Bulgaria
will join the Eurozone in 2011, after having spent 3 years in ERM II (entry currently
scheduled for early 2008).
Bulgaria's economy contracted dramatically after
1989 with the dissolution of the Council for Mutual Economic
Assistance (COMECON), with which the Bulgarian economy had
integrated closely. The standard-of-living fell by about 40%, but it regained
pre-1990 levels in June 2004. United Nations
sanctions against Yugoslavia and Iraq took a heavy toll on
the Bulgarian economy. The first signs of recovery emerged in 1994 when the GDP grew and inflation
fell. During the government of Zhan Videnov's
cabinet in 1996, the economy collapsed due to lack of international economic
support and an unstable banking system. Since 1997, the country has been on the
path to recovery, with GDP growing at a 4%–5% rate, increasing FDI,
macroeconomic stability and European Union
membership.
The former NMSII government elected in 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. Economic forecasts for 2005 and 2006 predicted
continued growth for the economy. Economists predicted annual year-on-year GDP
growth for 2005 and 2006 of 5.3% and 6.0% respectively. Forecasters expected
industrial output in 2005 to rise by 11.9% from the previous year, and by 15.2%
in 2006. Unemployment for 2005 was projected at 11.5%, 9% for 2006 and 7.25%
for 2007.
As of 2006 the GDP structure is: agriculture 8.0%; industry 26.1%; services
65.9%.
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Economy
