Bulgaria's Services Sector in 2026: Business Climate Recovers, but Uncertainty Remains High

During the first six months of 2026, Bulgaria''s services sector went through a period of considerable volatility. After a sharp deterioration in March and April, business climate, demand, and confidence among enterprises began to recover in May and June.

The business climate indicator in the services sector started the year at 11.4% in January and reached 11.6% in February. However, it declined to 2.0% in March and fell further to just 0.4% in April, the lowest level recorded during the period under review.

In May, the business climate improved to 8.2%, while in June it rose to 9.8%. Despite this recovery, the figure remained below the 15.4% recorded in June 2025 and the 18.4% reported in June 2024.

Current Business Conditions Remain Weak

Enterprises'' assessments of their current business conditions deteriorated significantly during the spring. The indicator fell from 7.0 points in January to minus 9.1 points in April.

A slight improvement was recorded in May, when the indicator rose to minus 6.1 points, while in June it reached minus 0.2 points. This suggests that the sector is gradually stabilizing, although current business conditions have not yet become clearly positive.

Current demand for services also declined, reaching minus 6.2 points in April. However, it recovered to 4.9 points in May and increased further to 8.0 points in June, the highest level since the beginning of the year.

Expectations for the Coming Months Improve

Despite the difficult current conditions, businesses in the services sector are becoming more optimistic about the future.

Expected demand for services over the next three months rose from 6.0 points in January to 21.4 points in June. This indicates that companies expect more customers, new orders, and stronger business activity in the months ahead.

Expectations regarding business conditions over the next six months are also positive. The indicator reached 24.7 points in May and remained at the relatively high level of 20.8 points in June.

Confidence in the sector also recovered. After falling to minus 2.0% in April, the confidence indicator rose to 5.3% in May and to 9.7% in June.

Enterprises Plan to Hire More Employees

Employment expectations improved significantly in May and June. The indicator reached 11.8 points in May and 8.2 points in June.

This means that more businesses expect to increase their workforce over the next three months. At the same time, finding suitable employees remains a serious challenge.

In June 2026, 27.6% of enterprises identified labor shortages as a factor limiting their activity. This was a significant increase compared with 19.8% in May.

Prices for Services Are Likely to Continue Rising

Price expectations remained positive throughout the first half of the year. The indicator increased from 4.9 points in January to 10.5 points in May, before easing slightly to 9.0 points in June.

This shows that more businesses expect to raise their prices than to reduce them. The main reasons may include labor costs, rents, equipment, and other operating expenses.

Economic Uncertainty Is the Main Obstacle

The most serious problem facing the sector in 2026 remains the uncertain economic environment. In June, it was identified as a difficulty by 53.3% of enterprises.

Throughout the first six months of the year, the share remained above 50%, reaching 54.5% in March and 54.0% in both April and May.

Competition within the sector also remains an important factor. At the beginning of the year, it affected more than 40% of enterprises, although the share declined to 30.1% in June.

Insufficient demand became a more serious problem towards the end of the first half of the year. The share of businesses identifying it as an obstacle rose from 13.5% in May to 19.9% in June.

Financial difficulties gradually declined, falling from 12.6% in February to 8.9% in June. Weaknesses in economic legislation affected 17.0% of enterprises in June.

Only 15% of Enterprises Report No Difficulties

In June, only 15.3% of enterprises in the services sector stated that they were experiencing no difficulties. This means that nearly 85% of businesses faced at least one obstacle affecting their operations.

The data show that despite the improvement in the business climate, the sector continues to operate in a difficult and uncertain environment.

Conclusion

During the first half of 2026, the services sector showed signs of recovery following the sharp decline recorded in March and April. Business climate, demand, and confidence improved in May and June, while expectations for the coming months became more positive.

Nevertheless, current business conditions remain weak, while economic uncertainty, labor shortages, competition, and insufficient demand continue to restrict business activity.

Overall, in 2026 the services sector is moving towards gradual stabilization, but it is still far from achieving strong and sustainable growth.