The recent elections in Hungary brought a breath of fresh air and the promise of a meaningful shift in the country’s outlook. Mass protests in Bulgaria late last year showed that Bulgarians are also hoping for change. The snap elections scheduled for Sunday, April 19, are likely to result in a victory for the newly formed Progressive Bulgaria party, whose ideological scope remains broad and loosely defined. However, there are concerns that it may adopt a mildly eurosceptic stance—or even seek warmer relations with Moscow.
A Fast-Growing Economy Between East and West
Bulgaria is a relatively small country, with a population of 6.7 million and a GDP of USD 148 billion, and remains the poorest EU member in terms of GDP per capita. At the same time, it is one of the fastest-growing economies in the European Union. Over the past two years, GDP growth has exceeded 3%, and it is expected to remain around this level both this year and next.
Economic growth has been accompanied by double-digit wage increases. However, this has gone hand in hand with elevated inflation. In March, inflation climbed back above 4%, roughly double the target of the European Central Bank. It is worth noting in this context that Bulgaria adopted the euro at the beginning of this year. This did not come as a major shock, given that the Bulgarian lev had long been pegged at around 1.96. The currency board system was introduced in 1997 to combat hyperinflation, initially linking the lev to the German mark, which was replaced by the euro in 1999.
Geographically and historically, Bulgaria serves as a bridge between Europe and Asia. Eastern influences are clearly visible, reflecting its Byzantine heritage. The country is the birthplace of the Cyrillic alphabet, further linking it to the Orthodox East. Turkish influences are also evident, as Bulgaria was part of the Ottoman Empire for nearly 500 years between the 14th and 19th centuries. It regained independence with Russian support at the end of the 19th century, forging strong ties with Russia. After World War II, Bulgaria became one of the Soviet Union’s most loyal allies in the Eastern Bloc.
Rising Euroscepticism, but EU Support Remains Strong
In recent years, Bulgaria has been one of the least politically stable countries in the EU. Sunday’s vote will mark the eighth parliamentary election since 2021. The snap elections follow the resignation of Prime Minister Rosen Zhelyazkov’s government at the end of 2025, triggered by massive protests involving over 100,000 participants. Bulgarians expressed frustration with the functioning of the state, corruption, and plans to raise taxes.
The newly established Progressive Bulgaria party, led by former president Rumen Radev, is currently the frontrunner, with polling support of around 30%. Radev positions himself as an anti-establishment figure, appealing to voters disillusioned by corruption. The party’s lack of a clearly defined ideological direction allows it to attract support from across the political spectrum. At the same time, it makes its potential policy direction difficult to predict.
As president, Radev has expressed views that could be interpreted as eurosceptic and pro-Russian. However, these statements carried less weight given the limited executive power of the presidency. His potential victory raises questions about Bulgaria’s future cooperation within the EU and NATO, though the scale of this risk remains unclear. Progressive Bulgaria will most likely need to form a coalition to govern. A partnership with pro-European liberals from the PP–DB alliance could mitigate these concerns and offer a path to stable governance—something that would likely be welcomed by investors.
It is also worth noting that although eurosceptic sentiment has been rising in Bulgaria—as in many EU countries—support for the EU remains strong. Recent polls suggest that roughly three out of five Bulgarians support EU membership. The adoption of the euro is less popular, with 49% opposed and 42% in favor according to a recent Eurobarometer survey, but it is not a dominant issue for most citizens. Given the historical context, it is not surprising that a portion of society—estimated at around one quarter—remains pro-Russian, although attitudes toward Russia have deteriorated since its full-scale invasion of Ukraine in 2022.
Markets Show No Signs of Panic
When assessing investor sentiment in the context of political developments, the first step is often to examine the currency market. However, political changes in Bulgaria have little impact on the euro, as the country’s economic weight within the eurozone is too small—its GDP accounts for less than 1% of the bloc.
A more relevant perspective is the bond market. Bulgarian eurobonds have followed trends similar to those in other countries in the region. In recent months, the war in Iran has been a key factor putting pressure on prices. Recently, however, sentiment has improved, leading to a partial rebound, although prices remain slightly below the levels seen at the beginning of the year.
The equity market also offers important insights. At the start of 2026, Bulgaria’s SOFIX index, which tracks the 15 largest listed companies, recorded a strong rally, gaining around 20% in the first three weeks of the year. Other regional markets also posted gains, though on a smaller scale. This strong performance can largely be attributed to Bulgaria’s adoption of the euro, which reduced risk premiums and improved access to the market, supporting capital inflows. The relatively low liquidity of the Bulgarian market also amplified volatility.
The subsequent decline may be explained by profit-taking following the initial surge. The war in Iran also weighed on equities. April brought some stabilization, although—unlike in most other markets, including Poland—there has been no significant rebound so far. It cannot be ruled out that the upcoming elections are casting a mild shadow over investor sentiment. Nevertheless, compared to the beginning of the year, the SOFIX index remains approximately 3% higher.
There are no signs of panic in the markets. Investors are accustomed to political volatility in Bulgaria, the election outcome appears relatively predictable, and the associated risks are not significant enough to fundamentally alter the country’s perception. At the same time, the elections offer a chance for political consolidation and stabilization. A sharp deterioration in sentiment is not expected. However, investors may adopt a more cautious stance in the near term, awaiting clarity on who will form the government, the strength of its mandate, and the policy direction it will pursue. Uncertainty may be heightened by the broad and somewhat inconsistent messaging of the leading Progressive Bulgaria party.
Bulgaria’s recent adoption of the euro enhances its attractiveness to investors and may help offset potential risks related to political change. At the same time, it is important to emphasize that the country’s market is still in an early stage of development and relatively illiquid, which can amplify volatility.
