Bulgaria’s Current Account Deficit Widens to €4.6 Billion in First Half of 2026

KEY TAKEAWAYS

• Bulgaria’s external position deteriorated significantly during the first half of 2026, with the current account remaining in deficit.
• The deterioration has been driven primarily by the country’s widening trade deficit, as imports continue to exceed exports.
• Bulgaria’s goods trade deficit reached approximately €5.6 billion in January–June 2026, based on the latest available monthly balance-of-payments and trade data.
• The current-account deficit is considerably smaller than the trade deficit because Bulgaria continues to record surpluses in services and other components of the external balance.
• The trend follows a sharp deterioration in Bulgaria’s current account during 2025, when the annual deficit reached 5.9% of GDP, according to the Bulgarian National Bank.
• Bulgaria’s economic outlook is therefore increasingly influenced by strong domestic demand, rising imports and the country’s ability to expand exports.

Bulgaria’s external balance has come under increasing pressure in 2026 as imports continue to grow faster than exports, widening the country’s trade deficit and weighing on the current account. The latest data point to a substantial deterioration compared with previous years, although services and other external income flows continue to offset part of the deficit.

Bulgaria’s External Deficit Is Growing

Bulgaria entered 2026 with an already weakened external position.

The Bulgarian National Bank reported that the country’s current-account deficit had widened sharply in 2025, reaching 5.9% of GDP, compared with 1.4% in 2024. The main reason was the growing deficit in trade in goods.

The trend has continued into 2026.

The latest monthly data show that Bulgaria’s trade deficit reached €1.01 billion in June, compared with €575.9 million in June 2025.

Imports Continue to Outpace Exports

The central problem behind the deterioration is the imbalance between goods entering and leaving the country.

Bulgaria’s imports have remained strong, reflecting domestic consumption, investment and demand for foreign-produced goods.

At the same time, exports have also increased, but not enough to eliminate the growing trade gap.

In January–May 2026, goods exports reached €18.6 billion, up 7.7% year on year, according to data reported by the Bulgarian National Bank.

Trade Deficit Reaches a New Level

The goods trade deficit amounted to approximately €4.57 billion in January–May 2026, compared with €3.32 billion during the same period of 2025.

June added another €1.01 billion to the deficit.

That means the cumulative goods trade gap had risen to roughly €5.6 billion by the end of June.

This figure is important because the trade balance is the largest factor behind Bulgaria’s worsening current-account position.

The Current Account Is Not the Same as the Trade Balance

The two figures should not be confused.

The trade balance measures exports and imports of goods.

The current account is broader and also includes services, primary income and secondary income.

Bulgaria’s tourism industry, transport services and other service exports generate significant revenues that partly compensate for the deficit in goods trade.

As a result, the current-account deficit is smaller than the merchandise trade deficit.

Services Provide an Important Cushion

Bulgaria’s services sector remains one of the country’s most important external sources of income.

Tourism is particularly important during the summer months, while transport, information technology and business services also contribute to export earnings.

These revenues help offset some of the money leaving the country to pay for imported goods.

Without the services surplus, Bulgaria’s external deficit would be significantly larger.

2025 Was Already a Warning Sign

The deterioration did not begin this year.

According to the BNB’s economic review, Bulgaria’s current-account deficit increased to 5.9% of GDP in 2025, compared with 1.4% in 2024.

The central bank attributed the deterioration mainly to the growing trade deficit.

The development represented a significant reversal from the relatively stronger external position Bulgaria had maintained in earlier years.

Domestic Demand Is Playing a Role

Strong domestic demand is one of the factors supporting imports.

When households and businesses spend more, demand for foreign-made consumer goods, machinery, equipment and other products also increases.

This can support economic growth in the short term.

However, if imports grow significantly faster than exports, the result is a larger external deficit.

Investment Also Raises Imports

Investment can have a similar effect.

Large infrastructure projects, industrial investment and purchases of machinery often require imported equipment.

That means a country can experience a widening trade deficit even while its economy is expanding and companies are investing.

For Bulgaria, some of the increase in imports reflects precisely this type of demand.

Defense Spending Can Affect the Trade Balance

Military modernization can also influence Bulgaria’s external accounts.

The country is purchasing major defense equipment from foreign suppliers, including F-16 fighter aircraft and associated systems.

Such purchases represent imports rather than domestic production.

The BNB has previously noted that military equipment deliveries were an important factor affecting Bulgaria’s trade balance and current-account dynamics.

The F-16 Program Is One Example

Bulgaria’s transition from Soviet-era military equipment to modern NATO systems involves substantial foreign purchases.

The acquisition of F-16 aircraft is part of this process.

Such transactions can temporarily increase imports by hundreds of millions or billions of euros, depending on the timing of deliveries.

They do not necessarily indicate weakness in the broader economy, but they can have a significant statistical effect on the external balance.

Bulgaria Still Has Strong Export Sectors

The widening deficit should not be interpreted as meaning that Bulgarian exports are collapsing.

In fact, goods exports increased by 7.7% year on year in January–May 2026.

Bulgaria remains an important exporter of machinery, electrical equipment, metals, chemicals, agricultural products and other manufactured goods.

The problem is that import growth and the overall value of imports remain higher.

The Gap Is Becoming More Difficult to Ignore

The size of the deficit matters because persistent external deficits mean that a country is spending more abroad than it earns from its current international transactions.

The difference has to be financed through capital inflows, borrowing, foreign investment or other financial transactions.

This does not automatically create a financial crisis.

But a prolonged deterioration can increase a country’s vulnerability to external shocks.

Bulgaria Still Has Significant Financial Buffers

The widening current-account deficit does not mean that Bulgaria is facing an immediate balance-of-payments crisis.

The country continues to hold substantial international reserves.

The BNB reported that Bulgaria’s gross international reserves remained high relative to commonly used indicators at the end of 2025, covering approximately eight months of imports of goods and services.

This provides an important buffer against external financial pressures.

The Euro Adoption Changes the Context

Bulgaria’s entry into the euro area also changes the broader institutional environment surrounding its external accounts.

The country joined the euro area in 2026, integrating its monetary system more closely with the European Central Bank and the wider euro-area financial system.

This does not eliminate the need for external competitiveness.

However, Bulgaria’s external imbalances will now be assessed within a monetary union rather than under an independent national currency regime.

Competitiveness Remains Important

For Bulgaria, the long-term answer to a persistent external deficit is likely to depend heavily on productivity and export competitiveness.

Higher-value manufacturing, technology, business services and tourism can all increase foreign earnings.

If exports become more sophisticated and productive, Bulgaria can generate more external income without relying primarily on low-cost labor.

Wage Growth Can Also Affect Competitiveness

Bulgarian wages have risen considerably in recent years.

That has improved household incomes but also increases labor costs for companies.

If productivity grows more slowly than wages, some exporters can become less competitive internationally.

The challenge is therefore to ensure that wage increases are accompanied by higher productivity.

Labor Shortages Add Another Challenge

Bulgaria is also experiencing demographic and labor-market pressures.

The National Statistical Institute reported that 32.4% of industrial enterprises identified labor shortages as a factor limiting their activity in June 2026.

A shortage of workers can restrict companies’ ability to expand production and exports.

This makes investment in automation, technology and skills increasingly important.

Bulgaria Needs More High-Value Exports

One way to improve the external balance is to increase the value generated by each exported product.

Industries such as electronics, machinery, information technology, pharmaceuticals and specialized business services can generate significantly more export revenue than lower-value commodity production.

Moving toward these sectors could help Bulgaria reduce its dependence on imported goods while increasing foreign earnings.

Tourism Remains a Major Asset

Tourism provides Bulgaria with an important natural advantage.

The country attracts millions of foreign visitors to its Black Sea coast, mountains, historic cities and winter resorts.

Every foreign visitor who spends money in Bulgaria contributes to the services export balance.

A stronger tourism sector can therefore help offset part of the merchandise trade deficit.

The Black Sea Economy Is Also Important

Bulgaria’s Black Sea ports provide another channel for international trade.

Varna and Burgas connect Bulgarian companies to European and global markets.

Improving port infrastructure and logistics could make Bulgarian exports more competitive and potentially increase the country’s role as a regional transport hub.

The Deficit Is Not Necessarily Permanent

External deficits can change significantly from year to year.

Large investment cycles, defense deliveries, energy prices and tourism revenues can all affect the balance.

A country can therefore record a substantial deficit in one period and a much smaller one later.

What matters most is whether the deficit becomes a persistent structural feature.

The 2026 Data Deserve Attention

The first-half figures indicate that Bulgaria’s external imbalance remains a significant economic issue.

The combination of a large goods trade deficit and continued pressure on the current account suggests that domestic demand is still generating substantial demand for imported products.

At the same time, exports are growing and services continue to provide an important counterweight.

What Could Improve the Situation

Several developments could help Bulgaria’s external position.

Faster export growth would directly reduce the trade gap.

Higher tourism revenues would strengthen the services balance.

Greater foreign investment in export-oriented industries could increase production capacity.

And higher productivity could allow Bulgarian companies to compete more effectively in European and global markets.

The Main Risk Is a Structural Imbalance

The biggest concern is not one unusually large monthly deficit.

It is the possibility that Bulgaria could become increasingly dependent on imports while export growth remains insufficient.

That would make the external balance more sensitive to changes in financing conditions, global demand and energy prices.

For a small open economy, maintaining export competitiveness is therefore essential.

Bulgaria’s Economy Is Still Growing

Despite the external imbalance, Bulgaria’s economy is not currently showing signs of a collapse.

The National Statistical Institute continues to report economic activity and strong wage growth.

The challenge is that economic growth based heavily on domestic consumption can generate more imports than exports.

A more export-oriented growth model would be more supportive of a sustainable external balance.

The Outlook Will Depend on Exports

The second half of 2026 will provide a clearer picture of whether the current deterioration is temporary or becoming structural.

If exports accelerate while import growth slows, the current-account deficit could narrow.

If domestic demand remains strong and imports continue rising rapidly, external pressures could persist.

Tourism revenues during the summer season will also be an important factor.

A Key Indicator for Bulgaria’s Economy

The current account is not a measure of whether ordinary Bulgarians are becoming richer or poorer.

It is instead an indicator of the country’s financial relationship with the rest of the world.

A deficit can coexist with economic growth and rising living standards.

But persistent large deficits can indicate that domestic spending is exceeding the economy’s ability to generate income from abroad.

Bulgaria’s widening external deficit in 2026 is therefore an important economic signal rather than an immediate crisis. The country’s growing goods imports are being partly offset by stronger exports and services revenues, while international reserves provide a substantial buffer. The key question for the coming years will be whether Bulgaria can increase the productivity and value of its exports fast enough to prevent the trade deficit from becoming a persistent structural weakness.