The Council for Economic Analysis has released a detailed study on the macroeconomic implications of Bulgaria's planned adoption of the euro, authored by Assoc. Prof. Plamen Nenov, Secretary of the Council. Bulgaria is set to join the eurozone on January 1, 2026, marking a key milestone in the country's European integration following over 25 years of a currency board system. The analysis examines the potential economic effects associated with this transition.

Drawing on the experience of other Eastern European countries, the study highlights that the primary macroeconomic impact of switching to the euro stems from the elimination of currency risk. This reduction in risk typically translates into lower interest rates, higher asset values, and increased foreign investment. In the short and medium term, these effects mirror those of accommodative monetary policy, resulting in greater aggregate demand, consumption, and investment. Unlike temporary monetary policy measures, however, the benefits of adopting the euro are generally more enduring.

Historical data from other euro adopters indicate that labor markets experience notable gains in employment and wages, particularly in non-tradable sectors such as construction, retail, and hospitality. Investments in fixed assets tend to rise in the medium term, not only in infrastructure and buildings but also in innovation and digital technologies. Trade effects are more modest: imports increase, while exports largely remain stable, showing that the euro's stimulative effects operate primarily through domestic demand rather than export growth.

For Bulgaria, the expected stimulus may be somewhat smaller than for other new eurozone members because the long-standing currency board has already minimized currency risk. Nonetheless, recent trends in housing prices and the stock market around the positive convergence report suggest potential for stronger effects.

Given the economy's current high activity levels, which exceed potential output, the analysis recommends cautious fiscal management, including gradual public finance consolidation, to reduce overheating risks. Attention should also focus on productivity-enhancing policies that encourage investment and innovation in more competitive, export-oriented sectors.

Further measures include developing the capital market to accommodate greater investment activity and implementing policies to prevent excessive housing price growth. These steps are essential for supporting medium-term financial stability and mitigating the build-up of imbalances in the real estate sector.

The complete analysis is available on the Council for Economic Analysis website at cea.egov.bg.