Bulgaria's Credit Rating Outlook Upgraded by Fitch Amid Reduced Political Uncertainty

Fitch Ratings has reaffirmed Bulgaria's long-term foreign and local currency ratings at 'BBB+', but raised its rating outlook to positive.

The credit agency cited reduced political uncertainty following April's general elections, which resulted in a single-party majority government. This change is expected to facilitate progress on structural reforms that could support potential growth and higher levels of wealth.

Fitch cut Bulgaria's estimated economic growth to 2.4% compared to its previous forecast of 2.9%, but noted the country has consistently outperformed euro area growth rates in recent years.

However, Fitch warned of signs of economic overheating, including macroeconomic imbalances caused by strong nominal wage growth and a widening current account deficit.