Agricultural Municipal Economies Show Major Decline in 2023
Against the backdrop of the recovery from the shocks of the pandemic, the war and high inflation, the largest municipal economies in 2023 remain Sofia, Varna, Plovdiv and Burgas, while the leaders in terms of economic growth are small municipalities, focused on industry and energy. However, regional economic growth is a mixed bag, with much of southern Bulgaria registering growth in value added, but many regions in northern Bulgaria experiencing a decline. This is largely a consequence of the weaker performance of agriculture compared to the previous year, which in turn highlights the need for modernization and investment in these less developed regions.
In 2023, Sofia remains the largest municipal economy, generating 46 billion leva in added value[1]. Plovdiv (BGN 6.2 billion), Varna (BGN 4.7 billion), Burgas (BGN 3.6 billion) and Ruse (BGN 1.8 billion) also join the top five. The energy centre of Radnevo and Stara Zagora also added more than a billion in value, and for the first time this year Kazanlak, Pleven and Shumen also surpassed this figure, bringing the number of “billionaire” local economies to ten out of 265. The number of municipalities with less than 100 million leva of added value remains almost unchanged – 173. The smallest municipal economy in the country is that of Treklyano with only 252 thousand BGN of added value, and only it and Boynitsa remain with less than 1 million BGN.
The municipality with the highest average per capita value added – and therefore the highest level of economic development – in 2023 is the industrial centre of Devnya with BGN 91 thousand per capita. The top 5 is also joined by Radnevo (87 thousand leva per person), Galabovo (50 thousand leva per person), Sopot (44 thousand leva per person) and the capital (36 thousand leva per person). It is important to note, however, that the data for most of the municipalities in Srednogorie, Kozloduy, Radnevo and Krumovgrad are confidential, and they – thanks to their strong mining, processing or energy industries – would also rank at the top. With less than BGN 1,000 per capita in 2022 remain 5 municipalities, with less than 5,000 – as many as 137, demonstrating once again the concentration of a significant part of the economic activity in Bulgaria in relatively compact geographical areas, as well as very uneven economic development.
While 2022 was a year of near-universal nominal growth in municipal economies under the influence of recovery from the effects of the pandemic, inflation, and changes in international markets, especially for agricultural produce, the trends in 2023 are mixed. Of the 252 municipalities for which value-added data are available for the past two years, the local economy grew in 144 of them, remained flat in three, but declined in 105, despite significant price increases during the year. There is a clear territorial clustering in the dynamics in 2023. There are individual municipalities with negative growth in South West and South Central Bulgaria, but most have increases in value added, most strongly in the small municipalities around Sofia. In the South-East region, tourist municipalities are also growing strongly under the influence of the recovery in international travel, while most municipalities in the Yambol area are registering declines.
However, decline in value added in Northern Bulgaria is almost universal, especially in the smaller less developed municipalities along the Danube. Economic growth can be observed in some of the industrial centres – Varna, Gabrovo, Shumen, Veliko Tarnovo, but almost all municipalities in whose economies agriculture plays a major role have seen a noticeable decline in value added, in many places by 30-40% compared to the previous year. The reasons for this lie mainly in the calming of international markets and the fall in agricultural prices. Negative dynamics can also be observed in the municipalities along the northern Black Sea coast, where the recovery of tourism has been much slower than in the south.
Municipal value added dynamics in 2023 once again highlight the disparities in the economic potential of regions. While strong southern cities and industrial regions with well-trained workforces and developed many and complementary industries maintain their growth, in the north, highly dependent on one industry, small municipalities face significant challenges. This trend also points to a development path for the less developed parts of the North that inevitably passes through diversification of local economies towards a greater role for industry and services, improving infrastructure and human capital, but also empowering local government to seek the best solutions.
[1] In 2023, the number of municipal economies with confidential data is 11 – both small municipalities such as Borovan, Valchi Dol, Nikola Kozlevo, Malko Tarnovo and Chernoochene, and regional leaders dominated by very large enterprises such as Kozloduy, Krumovgrad, Mirkovo, Pirdop and Chelopech. The data and comparisons presented here exclude these municipalities.
