GDP growth edges down in the first quarter but remains robust by regional standards

GDP reading: According to a preliminary reading, GDP growth waned to 3.1% year on year in the first quarter from 3.4% in the fourth quarter of last year. On a seasonally-adjusted quarter-on-quarter basis, economic growth ebbed to 0.6% in Q1, compared to the previous period's 0.9% expansion and marking the worst reading since Q4 2023. Both the year-on-year and quarter-on-quarter readings easily outpaced the EU average—partly to be expected given Bulgaria’s relatively low GDP per capita and thus higher potential for catch-up growth.

Domestic demand was key driver: The year-on-year expansion was driven by consumption and investment, while external trade was weak: Exports contracted and imports surged in Q1. Double-digit wage growth, low unemployment and easing financial conditions were likely all factors that aided domestic demand in Q1.

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