Net foreign investment in Bulgaria will be four times lower in 2024 than in the previous year, according to preliminary data from the Bulgarian National Bank (BNB) released on Thursday.
At the end of August, foreign direct investment in one of the EU’s poorest countries stood at €697.8 million. This compares with net foreign direct investment (FDI) in the country of €3.103 billion in 2023, a huge drop of 77%.
The net foreign investment flowing into Bulgaria between January and August equals just 0.7% of the country’s GDP.
In August alone, net FDI inflows were positive and amounted to €100.5 million – almost six times lower than in August 2023, when the net flow of foreign investment was positive at €590.3 million.
The most significant investments in Bulgaria in 2024 will come from the Netherlands, Austria and Greece.
The BNB notes that foreigners are slowly withdrawing from the Bulgarian property market, with negative net investment inflows at €3.1 million.
The Bulgarian property market is now entirely driven by domestic demand. Last year, the Bulgarian economy began to feel the effects of the slowdown in the German economy. The country’s industrial production has fallen by almost 10% year-on-year. However, the Bulgarian economy continues to grow, driven by the services sector, domestic consumption, and EU grants.
FDI into Bulgaria is also declining for domestic reasons. The country’s political crisis has been ongoing for more than three and a half years, and short-lived parliaments frequently make changes to legislation that affect the country’s business climate, offsetting the positive impact of low taxes and slightly cheaper labour compared to Central European countries.
Bulgaria is also losing the opportunity for foreign investment for the time being due to the blocked €5 billion Recovery and Sustainability Plan payments aimed at greening the local economy.
(Krassen Nikolov | Euractiv.bg)
Source: euractiv.com
