On October 18, 2024, the international credit rating agency Fitch reaffirmed Bulgaria’s long-term foreign currency credit rating at 'BBB' with a positive outlook. This confirmation is significant news for businesses in Bulgaria, including those in Ruse and the region, particularly in the context of the ongoing economic challenges and the upcoming adoption of the euro.

Key Factors Behind the Rating

Fitch highlights Bulgaria's strong external and public balances compared to other countries with the same rating, as well as its stable macroeconomic policies, supported by EU membership, as the country’s key strengths. However, low labor productivity and an unfavorable demographic structure remain long-term challenges for economic growth and public finances.

Positive Outlook for Euro Adoption

Fitch notes optimistic expectations regarding the adoption of the euro, which could improve Bulgaria's external macroeconomic indicators. While the process may be delayed beyond the government's official target of January 2025, there is strong political commitment at both national and European levels. For businesses in the region, the adoption of the euro would mean easier access to international markets, a more stable financial environment, and reduced uncertainty in exchange rates.

Economic Growth and Inflation

Fitch's GDP growth forecast for 2024 is 2%, slightly above the 1.8% achieved in 2023. Private consumption and investment activity remain stable despite ongoing political uncertainty. Inflation, while decreasing, is expected to rise slightly in the coming years, with an average inflation rate of 3.5% projected for 2025.

Impact on Businesses in Ruse and the Region

For companies in Ruse and the region, this economic stability presents opportunities for long-term investment planning and business expansion. The positive outlook for euro adoption, combined with expectations for stable economic growth, could attract foreign investment to the region and strengthen ties with international markets.

Sectors with a high export focus—such as manufacturing, logistics, and trade—stand to benefit significantly from the stable macroeconomic environment and the upcoming euro adoption. Companies in the region that are already part of international supply chains or working with European partners will enjoy greater predictability in financial operations and can expect lower costs associated with currency risk.

Conclusion

Fitch's reaffirmation of Bulgaria's rating and the positive outlook send a strong signal about the stability of the country’s macroeconomic policies and long-term commitment to adopting the euro. For businesses in Ruse and the region, this creates improved conditions for growth, investment, and expanding international cooperation.

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Source: Fitch Ratings

Link to the original article: Fitch Affirms Bulgaria at 'BBB'; Outlook Positive

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