Latest Report ‘Economic and Investment Profile of Sofia Municipality’ 2020

The new report, “Economic and Investment Profile of Sofia Municipality 2020: Macroeconomic Profile,” is available for download from our website. The data were prepared by the Institute for Market Economics at the Sofia Agency for Privatization and Investment request and provide an overview of the capital’s leading sectors, the investment profile, and indicators showing Sofia’s strong development in recent years of accelerated growth.

As the country’s leading regional economy, Sofia manages to advance significantly faster than the others and even to approach the average European values of some indicators, especially on the labor market. The rapid positive dynamics are especially visible in the fastest growing sectors – ICT and outsourcing, where there are new investments, significant production growth, and new jobs. In many ways, these are the years of Sofia’s most rapid economic development in the entire period since the beginning of the transition period in Bulgaria.

Sofia in numbers

The gross domestic product of Sofia district (capital) achieved a nominal growth of 8.7% in 2018 compared to 7.2% for the country. The capital’s economy accounts for approximately 40% of the country’s economy. The acceleration of growth in the capital is mostly due to the positive dynamics in services, which already occupy nearly 90% of the added value in Sofia.

The development of the digital sector, especially in the field of information technologies and services, is the main engine for the growth of the capital’s economy. The growth is largely driven by the constant influx of population, including young and active people, against the country’s declining population. In 2018, the gross domestic product per capita in the district of Sofia (capital) reached over BGN 33,000, which is more than twice the average for Bulgaria.

As with general economic activity, Sofia is the center of investment activity in the country. At the end of 2019, just over half of the total 25 billion euros of accumulated foreign direct investment (FDI) in Bulgaria were in the capital. Compared to the population, FDI in Sofia is 9.6 thousand euros per person or approximately three times the national average.

The impact of the crisis

At this stage, the question of how the economic crisis, which began in early 2020, will affect Sofia’s economy remains open. Nearly 18,000 jobs were lost in the capital during the state of emergency (March-May 2020). Against the background of over 700 thousand employees in Sofia in 2019, this effect is relatively limited and concentrated in the most affected sectors, including trade and tourism. The digital sector, which created the greatest number of new jobs on the crisis eve, is still in relatively good condition. At present, despite the heightened uncertainty caused by the pandemic’s development, Sofia’s competitive advantages continue to support the potential for the development of the capital in the medium- and long term.

Find more data and graphs in the full document “Economic and Investment Profile of Sofia Municipality 2020: Macroeconomic Profile” (in Bulgarian). This is the first part of the report. A second part of the survey will be published on our Market Analysis and Business Insights page within days.