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Bulgaria Outlook 2025

OUTLOOK 2025 – 6 VALUE STOCKS FOR YOUR PORTFOLIO
 Bulgaria's economy showed resilience despite the world and domestic challenges. In the first three quarters of 2024, the country posted steady annual GDP growth of 1.9% in Q1, 2.3% in Q2 and 2.6% in Q3 (non-seasonally adjusted data). The main drivers behind the growth were the individual and government consumption, which accelerated their contribution throughout the three quarters.
 Inflation has been on a downward trend, aligning with global patterns. Yet, there are signs that this disinflationary trend may be nearing its end. Unemployment rate gradually decreased throughout the year. At the same time, the average gross monthly wage increased, significantly outpacing inflation growth, thus being a major reason for the increased consumption. Preliminary estimates of the Ministry of Finance point toward 3.0% budget deficit at end-2024, in line with Maastricht criteria for joining Eurozone, targeted for 2026.
 For 2025 the projections by major institutions yield an average number of 2.8% again, ranging from 2.5% to 3.3%, driven largely by continued growth in private consumption, boosted by real income increases. Significant factors, which could affect the economy are the potential Eurozone accession and the already the de facto accession to Schengen. The biggest downside risk remains the prolonged recession in the key trading partners, thus limiting country’s exports.
 After 3 consecutive years of strong profitability growth, the banking sector showed more subdued performance in 2024. For the first 11 months of the year, net income reached BGN 3.3bn, just 1% below the same period in 2023. The primary reason for not achieving another record year was the sharp 91% YoY surge in provisioning charges, despite the continued decline in NPE’s. 2024 was an exceptional year for investors in the sector with individual returns ranging from 12.8% to 94.7%.
 2024 was a relatively strong year on the equity front as SOFIX recorded 16.7% growth. 2025 seems quite a hard year to predict with a lot of geopolitical uncertainties and moving parts, which could move the market in either direction. For the last few years investors seem to exert excessive focus on tech, pushing multiples in the sector to quite high levels, hardly to be sustainable in the long run, potentially curbing returns in the near term. Central banks’ policy will also be in focus in 2025, as the disinflation processes may be ending, while at the same time the economic slowdown may deepen. In 2025 we don’t betray our value-based investment strategy and our stock selection include 6 stocks with highest potential to beat the market in any path the economy takes. The common among them is stable business model, significant discounts to regional peers and chances for increased dividend returns in the near future. Besides these recommendations, we have selected a short listed of companies to watch.