Bulgaria's economy will grow by 2.9% in 2026, 3.5% in 2027 and 3% in 2028, according to a forecast from the economic analysis team at EY. The team sent the figures to the BTA news agency, with a forecast date of October.

Bulgaria will grow faster than both the EU and the eurozone in all three years. The analysts expect EU growth of 1.4% in 2026, 1.7% in 2027 and 1.4% in 2028. For the eurozone, the figures are 1%, 1.4% and 1.3%.

Bulgaria's growth next year depends on the scenario: 2.9% in the downside case and 3.7% in the optimistic one. For 2027, EY expects growth of 1.2% in Germany, 0.7% in France, 1.9% in Spain and 3.1% in Poland. All are below the baseline forecast for Bulgaria.

Bulgaria's growth comes with higher inflation than in the eurozone. Average annual inflation will fall from 5.4% in 2026 to 4.4% in 2027 and 2.5% in 2028. Annual inflation in Bulgaria was 5.6% in September.

In 2027, inflation in Bulgaria could fall to 3.1% in the optimistic case, or rise to 7% if the energy shock drags on. Average inflation in the eurozone next year will be 3.1%.

EY economists say higher prices cut household buying power and spending. The team says Bulgaria is one of the southern European economies where price pressure is stronger, and costly energy also raises the price of tourist services. Countries in Central and Eastern Europe react more to changes in energy prices. Energy makes up a bigger share of their consumer basket, and currency moves add to the effect.

The euro has weakened because of pricier energy and worries about government finances. That makes imports dearer and adds to price pressure. The Polish zloty and the Swedish krona have lost value against the euro. The Norwegian krone has gained, because Norway exports oil and gas. The Romanian leu is under new pressure because of political uncertainty, high inflation and a narrowing interest rate gap.

Eurozone inflation was 3.8% in September 2026. The forecast says it will stay close to that level in the coming months, then slowly fall to 2% by mid-2028. Energy is the main driver, while core inflation is fairly stable.

After the rate rises in September, the analysts expect key interest rates to go up again. Market expectations in October 2026 point to even tighter monetary policy. EY says European firms will probably judge investments by the cost of financing, and loans will weigh on household budgets.

Household spending in the eurozone will grow by 1.5% in 2025, 1% in 2026 and 0.7% in 2027.

Growth in Europe held up in the third quarter, according to EY's short-term estimates. Germany is recovering slowly, growth in France remains weak, and Spain and Poland are doing better than most large EU economies, despite an expected slowdown. Survey sentiment is better than the actual data on economic activity.

EY says eurozone growth will hold despite higher interest rates and geopolitical uncertainty. Fiscal policy and investment linked to artificial intelligence support it. Investment and exports are expected to stay fairly steady. Germany's fiscal expansion and the AI investment boom in the US may explain why Europe has coped with the energy shock.

Weaker growth could come from geopolitical escalation, trade fragmentation and higher tariffs, new disruption to energy supplies, fiscal stress, sharp corrections on capital markets and physical climate risks. A better outlook could come from faster adoption of artificial intelligence, investment in infrastructure and defence, structural reforms and fewer trade barriers.

The main sources of uncertainty for Europe's economy remain how long the conflict in the Middle East lasts and how energy prices move.