Bulgaria's Credit Rating Upgraded to Positive Amid Reduced Political Uncertainty

Fitch Ratings has reaffirmed Bulgaria's sovereign credit rating at 'BBB+' and revised its outlook to positive from stable.

The positive outlook reflects reduced political uncertainty following the formation of a government supported by a single-party parliamentary majority, which Fitch views as an opportunity to advance structural reforms aimed at supporting potential growth and improving public-sector governance.

The agency noted that Bulgaria's current rating is supported by its benefits from eurozone and European Union membership, as well as its sound public finances and external balance-sheet indicators. However, these strengths are partly offset by the risk of economic overheating driven by procyclical fiscal policy, high inflation, current-account deficits, and other factors.

Fitch forecasts that Bulgaria's GDP growth will gradually slow to 2.4% by 2028, with a more balanced structure of growth expected due to slower expansion of domestic demand and improved export performance.