Bulgaria's Economic Renaissance: From the Easterlin Paradox to Eurozone Integration
This article is my New Year's greeting to you. It appeared on Christmas Eve in the original Bulgarian version in Forbes Bulgaria, and this is a freestyle English translation. Wishing you a Happy 2026!
Translated from Bulgarian original. Big thanks to Forbes Bulgaria reporter and editor Rumen Sokolov, and to chief editor Vesselin Dimitrov for editing and running this opinion piece.
I still remember those crisp autumn mornings in Groningen, sitting in a cold lecture hall as our political science professor introduced us to the Easterlin Paradox. The concept was elegantly simple yet profoundly counterintuitive: beyond a certain threshold, increasing national wealth doesn’t necessarily lead to greater happiness among a country’s population. The richer people become, he explained with a knowing smile, the more reasons they’ll find to complain.
At the time, as a student on my third cup of coffee and dreaming of big horizons, I filed this away as an interesting academic curiosity. Some twenty years later however, living and working in Bulgaria, I find myself recalling that lecture almost daily. The better our country performs economically, the louder the chorus of complaints seems to grow. It’s the Easterlin Paradox unfolding in real time; on the streets, across social media, and at lunches and dinners throughout Sofia.
The facts speak for themselves, and they tell a remarkable story of a country’s transformation. When I first moved to Bulgaria in 2011, the country’s GDP stood at $36.86 billion. Today, in 2025, that figure has risen to $115.13 billion; an impressive 212% increase in just fifteen years. This isn’t statistical noise or accounting tricks: it’s real, substantive economic growth that has fundamentally transformed the Bulgarian landscape. The average monthly salary, a modest 669 leva in 2010, has nearly quadrupled to 2,588 leva in 2025.
These aren’t marginal improvements; they represent a complete reimagining of what is economically possible for millions of Bulgarians. While our fellow citizens often grumble about traffic jams and rising restaurant prices, these complaints are, paradoxically, symptoms of success. We sit in traffic because more people can afford more cars. Restaurants are pricier because wages have risen and demand has grown. The Easterlin Paradox predicted precisely this peculiar dissonance between prosperity and perception.
Bulgaria’s economy has demonstrated remarkable resilience throughout 2025, building on a recovery that gathered momentum in 2024. After GDP growth slowed to just 1.9% in 2023 due to global economic turbulence and the effects of Russia’s war in Ukraine, the economy rebounded with 2.8% growth in 2024, driven primarily by consumer spending. Higher real wages, increased employment, and expanded social transfers put money in people’s pockets, and they were spending it. As we close out 2025, the economic forecast for 2026 projects steady growth of 2.1%, with unemployment expected to fall to a historic low of 3.8% and inflation cooling to just 1.8%.
Of course, these projections assume political stability and timely adoption of the 2026 national budget; a process that, at the time of writing, remains unfinished and creates significant political uncertainty. Nevertheless, long-term trends remain encouraging. The labor market stays exceptionally tight, with unemployment at 4.2%, which essentially means full employment by most economic standards, with businesses across sectors reporting difficulty in finding qualified workers.
The structure of Bulgaria’s economy has evolved significantly, with wholesale and retail trade now accounting for 22.7% of gross value added, followed closely by mining and manufacturing at 21.3%. Particularly encouraging is that Bulgaria’s GDP per employed person reached €29,478 in 2024, reflecting steady productivity growth even through the pandemic years. The National Recovery and Resilience Plan is expected to play a catalytic role in sustaining this momentum, channeling substantial European funding toward infrastructure, digitalization, and green transition projects that will shape the Bulgarian economic landscape for decades to come.
Among all sectors, however, one stands out above the rest in terms of growth trajectory and future potential: technology. Bulgaria’s tech sector has become a shining star of the economy, delivering growth rates that outpace virtually every other industry. Between 2020 and 2024, the sector’s gross value added jumped from €4.5 billion to €7.5 billion—a remarkable 65% increase in only four years. While the sector represents 8.3% of national gross value added, its influence resonates far beyond these numbers.
Bulgaria has cultivated one of the most dynamic startup ecosystems in Southeastern Europe, with 489 funded startups between 2020 and mid-2025 - more than double than runner-up Romania. Our country boasts an impressive 19 growth-stage funded startups per million inhabitants, nearly three times the regional average. This success is no accident; it’s the result of deliberate investments in education, infrastructure, and supportive policies. Bulgarian venture capital and private equity funds have raised over €600 million and are actively seeking investment opportunities, with online tools and business software dominating the investment landscape at 68% of total investment value in 2024.
Major success stories like Payhawk, Endurosat, and Shelly Group have emerged from the Bulgarian tech scene, achieving valuations that would have seemed impossible just a decade ago. Foreign direct investment in information and communications reached €124.9 million in 2024, and Bulgarian tech investors aren’t just staying at home; they’re increasingly investing in Romania, Greece, the United Kingdom, and even the United States, taking Bulgarian innovation capacity global. The sector’s growth is fueled by a well-educated workforce, still-competitive labor costs, and Bulgaria’s strategic position as a nearshore tech hub for Western European companies seeking quality development at reasonable prices and European standards.
If the tech sector represents Bulgaria’s future, then the adoption of the euro on January 1, 2026 represents its most significant economic step in recent years. After nearly 19 years as a European Union member, Bulgaria will become the 21st country to adopt the euro as its official currency, replacing the Bulgarian lev at a fixed exchange rate of 1.95583 leva to one euro. The benefits of this transition are substantial and multifaceted. Most immediately, Bulgarian businesses and consumers will eliminate the hurdles and risks of currency exchange when trading with eurozone partners, which is a significant advantage given that 65% of Bulgarian exports go to EU countries and 45% specifically to eurozone countries.
Lower borrowing costs are virtually guaranteed as Bulgaria gains access to the European Central Bank’s monetary policy instruments and financial backstops, reducing currency uncertainty risk and strengthening external credit ratings. For businesses, especially small and medium enterprises, this means access to euro-denominated loans on better terms, as well as elimination of conversion costs and the reputational risks of a less familiar, albeit euro-pegged, national currency. Price transparency will improve dramatically, allowing Bulgarian consumers to compare prices across the eurozone and encouraging increased competition.
Bulgaria’s already impressive credit standing - the country maintains the second-lowest public debt in the EU at just 24.6% of GDP - will likely improve further, leading to even lower government borrowing costs and, ultimately, better public services. Perhaps most importantly, eurozone membership cements Bulgaria’s position within the European Union’s core decision-making structures, giving it a seat at the ECB’s interest rate committee and providing protection against external geopolitical pressures, particularly relevant given the current volatile international environment.
The country’s existing participation in the European Banking Union since 2020 has already laid much of the groundwork, ensuring a smooth operational transition. While some public skepticism remains, fueled partly by fears of price increases and partly by disinformation campaigns, the prevailing consensus among economists is that any inflationary effect will be moderate and temporary, far outweighed by the long-term benefits of deeper European integration.
As we stand on the threshold of 2026, reflecting on Bulgaria’s economic journey and the political back-and-forth surrounding the ill-fated 2026 national budget, I’m reminded of a conversation I had a few weeks ago at a startup event in Sofia. A young entrepreneur was passionately complaining about the challenges of doing business in Bulgaria; the bureaucracy, the talent shortage, the difficulty of raising capital. Yet that same entrepreneur had just closed a €2 million funding round, hired their twentieth employee, and was preparing to expand into three new European markets.
Their company wouldn’t have existed fifteen years ago; the ecosystem to support it simply wasn’t there. The capital wasn’t available, the talent pool was smaller, the market connections were absent. They were complaining precisely because they had choices, opportunities, and ambitions that their predecessors could only dream of. This is the Easterlin Paradox in action once again, but it’s also something more. As Bulgaria joins the eurozone, expands its tech sector, and continues its steady economic ascent, the complaints won’t disappear: they may even grow louder.
But scratch beneath the surface of those complaints and you’ll find a country that has transformed itself from a post-communist backwater into a competitive, innovative, and increasingly prosperous member of the European mainstream. The numbers tell one story, but lived experience tells another; of a nation that has learned to expect more because it has achieved more, and that sees challenges not as obstacles but as the price of admission to even greater success.
The euro may be just a currency, but for Bulgaria in 2026, it represents something far more significant: recognition that the country has earned its place at the European table, not as a supplicant but as an equal partner. And if we complain along the way? Well, that just means we’re prosperous enough to have opinions.
By Max Gurvits, Managing Partner at Vitosha Venture Partners, and Board Member of the Bulgarian Private Equity and Venture Capital Association (BVCA)