Georgi Angelov, chief economist at the Institute for Market Economics, has warned that Bulgaria’s current economic expansion is being driven less by productive capacity and investment and more by a rapid increase in borrowing and household consumption, creating what he described as a risk of overheating.
According to him, the combination of rising consumer and mortgage lending is fueling inflationary pressure while also widening the country’s trade imbalance. He argued that the current trajectory does not reflect a healthy investment-led cycle but rather debt-driven demand.
“We have the lowest unemployment in our 35-year history. This puts the worker in a strong position and wages are steadily growing due to the shortage of personnel. This is a better imbalance compared to the times of mass unemployment, but it is still an imbalance,” Angelov said, noting that labor market tightness is contributing to wage increases but also structural distortions.
He stressed that recent growth has been heavily concentrated in domestic consumption, while export performance is weakening and imports are rising at a double-digit pace. In his view, this signals a clear warning trend for the economy.
“This is a red light,” he said, pointing to what he considers an unsustainable imbalance between consumption and production.
