Bulgaria’s Shifting Economy: Decline of Low-Wage Industries and Search for New Growth
Bulgaria is undergoing a significant economic transition, moving away from its historical role as a low-wage manufacturing hub. Recent data indicates a rise in business closures, particularly in sectors reliant on inexpensive labor, alongside a simultaneous increase in new company registrations. This shift presents both challenges and opportunities for the nation’s economic future.
Rising Bankruptcies and Closures
In 2025, 4,531 companies in Bulgaria entered bankruptcy proceedings or were officially declared bankrupt, with 115 operating in the industrial sector [Bulgaria 2025, NSI]. An estimated 10% increase in bankruptcies is expected annually, according to data from the National Statistical Institute (NSI). The trade and automotive repair sectors account for the largest number of closures – 3,990 – while simultaneously witnessing the highest number of new registrations, with 42,297 new companies established out of a total of 47,827 [Bulgaria 2025, NSI]. Despite the influx of new, often small businesses, ten large factories have ceased operations in the last two years.
Automotive Sector Restructuring
The automotive industry has been particularly affected. “Elektrokabel,” a subsidiary of German company Nexans Autoelectric in Pleven, closed its doors six years ago. In 2024, another Pleven-based factory, belonging to German firm “Leoni,” ceased operations, impacting 1,300 workers. Both companies specialized in cable production. Further closures include the Japanese “SE Bordnetze” factory in Mezdra (2024), with another plant in Karnobat slated to close in June. “MD Elektronik,” a German company producing automotive cables in Vratsa, as well announced its closure mid-year, though its IT and shared services center in Sofia will remain operational. “Teklas Bulgaria” also filed for closure of its Vratsa production base, opened in 2022, which also operates in the automotive sector [24chasa.bg].
Beyond Automotive: Challenges in Other Industries
The bicycle industry has also faced difficulties. “Leader 96,” a Plovdiv-based enterprise with a 30-year history, requested bankruptcy proceedings at the end of last year after a pandemic-era boom in demand subsided. The garment sector is similarly struggling, with “Arda-Ruse” in Ruse and “BTB Bulgaria” closing due to customers shifting production to countries with lower costs, primarily in Asia. “Delta Textiles – Bulgaria,” the largest sock producer in Bulgaria, relocated to Turkey in 2023, and several smaller companies, including “Deka,” “Montana Manufacture,” “Idealfashion,” and “Elegant – SE,” have also ceased operations. Unilever also moved its ice cream manufacturing from Bulgaria to Romania last year.
Redundancies and Closures in 2025
In 2025, 63 notices of redundancies were filed with the Employment Agency, with 11 citing enterprise closure as the reason. These include tailoring companies “Elegant-SE” and “Deka,” yarn producer “Color Chart Bulgaria,” automotive industry firm MLB BG, and others such as Spirat, “Casting Technology Solutions,” “Dak Mes,” “Seva Global Services Center Bulgaria,” “Beltex-M,” the Plovdiv mint “Bulmint One,” and the “Dr. Atanas Dafovski” Medical School in Kardzhali.
Factors Driving the Changes
Maria Mincheva, Deputy President of the Bulgarian Chamber of Commerce, attributes the closures to a combination of factors, including declining industrial production in Europe, particularly in Germany’s automotive sector, high electricity prices, and rising labor costs [24chasa.bg]. She warns that continued increases in the minimum wage could lead to further bankruptcies if productivity doesn’t keep pace. The business environment in Bulgaria is also seen as unfavorable for new ventures, lacking a clear export strategy and a unified economic vision.
Government Support and Investment
The Ministry of Economy and Industry states it is working to create a stable business environment through policies aimed at reducing administrative burdens, digitizing services, and improving access to financing. Support is available for both strategic and small-to-medium enterprises (SMEs), aligning with the National Strategy for Small and Medium Enterprises 2021-2030, which implements over 119 measures across skills, digitalization, ecological transition, entrepreneurship, and access to markets and financing.
The Ministry has issued 7 certificates for investment in 2026 and 17 for 2025, representing 14 projects of Class A and 3 of Class B, totaling €150 million for 2026 and €220 million for 2025, with the potential to create 890 and 417 new jobs, respectively.
Enterprise Survival Rates
The Ministry of Economy emphasizes that the enterprise survival rate provides the most accurate indicator of economic stability. The one-year survival rate is 81.5%, and the five-year survival rate is 44%, compared to an EU average of 46% [24chasa.bg].
Inflation Update
Consumer inflation in Bulgaria fell by 0.8% in September 2025, with an annual inflation rate of 5.6% [BTA]. Year-to-date inflation, as measured by the consumer price index, was 3.4%, and the average annual inflation rate for October 2024 to September 2025 was 3.8% [BTA].
Construction production in Bulgaria shows a slight monthly but significant annual growth in July 2025, reaching 6.1% [BurgasMedia.com].