25.03.2025
On March 20, 2025, the European Central Bank (ECB) published its second Economic Bulletin of the year, outlining the key economic and monetary analyses that underpin the decisions of the Governing Council. The bulletin is released eight times a year and provides insights into economic trends in the euro area, inflation dynamics, credit conditions, and growth prospects.
Among the main highlights of the current edition are the reduction of key interest rates, revised forecasts for inflation and economic growth, and improved access to financing for businesses. These developments are significant not only for euro area countries, but also for states like Bulgaria, which is in the process of joining the monetary union.
Monetary Policy Supporting Growth and Stability
At its meeting on March 6, 2025, the ECB lowered all three key interest rates by 25 basis points — a decision reflecting moderate inflation and a gradual recovery in economic activity. This approach is expected to ease financing conditions across the economy and support both consumer demand and investment activity within the eurozone.
Inflation Moving Toward Target Levels
ECB analyses show that inflationary pressures continue to weaken. The forecast for average inflation in the eurozone in 2025 has been revised to 2.3%, mainly due to adjustments in energy prices. Inflation is expected to fall to 2.0% in 2026 and reach the ECB’s 1.9% target in 2027. Meanwhile, core inflation (excluding food and energy) remains stable, reflecting a slower pace of cost pass-through along the supply chain.
Moderate Growth with Cautious Optimism
Real GDP in the eurozone grew modestly — by 0.1% in Q4 2024. Projections for 2025 point to moderate growth of 0.9%, with the pace expected to accelerate to 1.5% in 2026 and 1.6% in 2027. Domestic consumption and exports remain the main drivers of growth, though uncertainties related to geopolitical risks and global trade continue to weigh on business confidence.
Financial Conditions Supporting Investment
According to ECB surveys, access to credit for both businesses and households is gradually improving. The slowing pace of interest rate increases and the stabilization of financial markets are creating favorable conditions for renewed investment, particularly in industrial sectors and areas related to the green transition and digitalization. Interest rates on new business loans have started to decline, a trend expected to continue in the coming quarters.
Although Bulgaria is not yet a euro area member, ECB decisions have a significant indirect impact on the Bulgarian economy, especially given the fixed exchange rate of the lev to the euro. Lower interest rate levels in Europe affect financing conditions and investor confidence both nationally and regionally.
For the business environment in Ruse — already positioning itself as an attractive investment destination — this development creates additional opportunities for growth. The ECB’s interest rate cuts may ease access to capital for companies seeking to expand operations or invest in production capacity. At the same time, Bulgaria’s upcoming eurozone accession adds a layer of macroeconomic stability that is crucial for long-term strategic projects.
Full text of the ECB Economic Bulletin, Issue 2 / 2025 (in Bulgarian):
ECB Economic Bulletin – Issue 2 / 2025
Source: European Central Bank (ecb.europa.eu)
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