Nearshoring Boom: Why Bulgaria is now becoming the secret favorite of the German economy

From the workbench to a high-tech center: Bulgaria's quiet rise in Europe

Diversification in times of crisis: How Bulgaria is benefiting from the radical restructuring of supply chains

Bulgaria is increasingly becoming a focal point of the European economy: At a time when geopolitical tensions and soaring energy prices are severely straining global supply chains, the southeastern European nation is emerging as one of the most attractive nearshoring destinations for German companies. The introduction of the euro in early 2026 and remarkable fiscal stability have further enhanced its appeal to investors. However, a recent survey by the German-Bulgarian Chamber of Industry and Commerce reveals a fascinating paradox: While companies' commitment to Bulgaria remains high and the country is transforming from a mere manufacturing hub to an innovative technology center, macroeconomic skepticism is simultaneously growing. Read the following article to learn why German companies are nevertheless investing heavily in Bulgaria, what risks exist, and how the Balkan state will hold its own in European competition in the long term.

Bulgaria caught between trust and caution

When confidence meets doubt: A country becomes a test of European resilience

The economic ties between Germany and Bulgaria have developed a dynamic in recent years that extends far beyond simple cost advantages. While global supply chains are being restructured and geopolitical tensions are increasing, the southeastern European country has emerged as one of the most noteworthy nearshoring destinations for German companies. The latest business climate survey conducted by the German-Bulgarian Chamber of Industry and Commerce among 83 companies paints a picture that appears contradictory at first glance, but upon closer examination reveals the true strength of the location.

89 percent of the companies surveyed rate Bulgaria's position as a nearshoring location as stable or improved, and 26 percent even see its attractiveness as having increased compared to the previous year. 77 percent of the companies are maintaining their presence in the country and are not planning to relocate their production or branches. At the same time, however, 47 percent of the surveyed companies expect a deterioration in the overall economic environment. This simultaneous commitment to their current location and macroeconomic skepticism is not a contradiction, but rather a telling indication of how German companies are now differentiating between short-term economic uncertainty and long-term strategic location assessments.

Between record confidence and growing caution: The real mood

The German-Bulgarian Chamber of Commerce (AHK Bulgaria) business survey from May 2026 reveals significantly more nuance than the headline alone suggests. 91 percent of respondents rate their current business situation as at least satisfactory, and 36 percent even consider it good. However, a look at the time series over the past few years reveals an interesting shift: In 2025, 52 percent of companies rated their business situation as good, while this figure fell to 36 percent in 2026. At the same time, the proportion of companies expecting an improvement in their own business situation rose from 35 percent in 2024 to 46 percent in 2025.

This development suggests that companies' expectations have shifted from a purely snapshot view to a more nuanced, multi-year perspective. Companies that have been operating in Bulgaria for years continue to assess their individual situation predominantly positively, while their evaluation of the overall economic environment is increasingly influenced by external factors located outside of Bulgaria. This separation between microeconomic confidence and macroeconomic caution is a key characteristic of the current sentiment and explains why loyalty to a location and skepticism about the economic outlook can coexist without being mutually exclusive.

Energy prices, geopolitics and the art of diversification

By far the most significant risk factor identified by the surveyed companies is the development of energy prices. Fifty-five percent consider rising energy costs a considerable risk, a level comparable to the crisis months of early 2022. This perception is not an isolated Bulgarian phenomenon, but reflects a Europe-wide reality. In June 2026, electricity prices in Europe temporarily skyrocketed to as high as €545 per megawatt-hour as a result of geopolitical turmoil. Bulgaria is therefore not an isolated case, but part of a pan-European cost shock that is impacting the investment calculations of all industrial locations on the continent.

Besides energy costs, 41 percent of the surveyed companies cite supply chain risks as a significant burden, and 69 percent expect further cost increases as a result of global developments. The companies' response to these uncertainties is remarkably pragmatic. Around 65 percent have already diversified their supplier base or are planning to do so. This figure underscores that supply chain resilience is no longer seen as an abstract management concept, but as a concrete operational necessity. Bulgaria benefits doubly from this: firstly, as a target for diversification away from more distant or politically riskier production locations, and secondly, as a location where companies themselves are increasingly relying on European suppliers.

A striking example is provided by the Bochum-based manufacturer of electric commercial vehicles, SEVIC Systems, which relocated its production to Plovdiv and established a German-Bulgarian joint venture there. Originally launched under license from a Chinese manufacturer, the company now sources all components from European suppliers, which reduces production times and significantly simplifies repair processes. With its own on-site development office, the company can also optimize production steps more quickly and offer maintenance services remotely. This complete relocation of the value chain to Europe exemplifies a trend that extends far beyond this individual case: Nearshoring increasingly means not only the relocation of final assembly, but the reorganization of entire supply structures within the European Union.

The euro as a silent turning point for investment logic

A historically significant factor that has been underrepresented in public perception so far concerns the monetary union. On January 1, 2026, Bulgaria became the 21st member to adopt the euro as its official currency. This step marks a turning point in economic history, fundamentally changing the investment calculations of foreign companies. The exchange rate risk, which despite the currency board system that had been in place for decades had always been a latent uncertainty factor in investment decisions, has now been completely eliminated.

The concrete effects of this step are already evident in the survey data. According to the German-Bulgarian Chamber of Commerce (AHK) survey, 13 percent of the companies surveyed are already actively shifting investments from Germany to Bulgaria. While this figure may seem moderate at first glance, it represents a remarkably rapid response given the inertia of investment decisions and the short time since the currency conversion. The Nuremberg Chamber of Industry and Commerce reported as early as March 2026 a significant increase in interest among Franconian companies in Bulgaria as a nearshoring partner, with representatives from the metal industry, information technology, pharmaceuticals, and legal consultancies present on site. The elimination of exchange rate risk is likely to further strengthen this trend in the coming years, as it removes a significant barrier to entry, particularly for medium-sized companies that had previously opted against complex currency hedging strategies due to capacity and risk considerations.

Macroeconomic Foundation: Why Numbers Speak for Themselves

The loyalty of German companies to Bulgaria as a business location cannot be explained solely by entrepreneurial inertia or sentimentality, but is based on a solid macroeconomic foundation. The European Commission expects economic growth of 2.7 percent for Bulgaria in 2026, a figure also confirmed by the European Bank for Reconstruction and Development. The Economist Intelligence Unit clearly ranks Bulgaria among the fastest-growing economies in the European Union in 2026, driven primarily by private consumption and growing foreign demand.

The unemployment rate in October 2025 was 3.6 percent, well below the eurozone average of 6.4 percent. According to other surveys, this figure even fell to 3.5 percent for the year 2025, effectively signaling full employment. Public debt amounts to only 23.8 percent of gross domestic product, a figure surpassed among eurozone countries only by Estonia. This fiscal soundness gives Bulgaria a considerable advantage in terms of confidence compared to many Western European economies struggling with significantly higher debt levels and structural budget deficits.

Bilateral trade between the two countries also empirically confirms this dynamic. Bulgaria's exports to Germany amounted to €5.26 billion, 14 percent higher than the previous year. Germany is thus one of Bulgaria's most important trading partners, and the trade relationship is developing dynamically in both directions. In particular, companies in the information technology, automotive supply, and electronics sectors are increasingly examining whether Bulgaria is a suitable location for resilient production and supply structures within the European Union.

Bulgaria - Find and become a partner - Image: Xpert.Digital

Bulgaria is transforming from an underestimated EU market into a strategic nearshoring hub for European industrial SMEs. With low location costs, EU legal certainty, access to the Eurozone, and strong logistics networks on the Black Sea, the country offers robust alternatives to Asian supply chains.

At the same time, Bulgarian companies also benefit from this growing economic network, which serves as a strong springboard for their own expansion into Germany, Europe and global markets.

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From workbench to knowledge hub: The underestimated transformation

While Bulgaria is still often perceived internationally primarily as a low-wage location, the country is undergoing a quiet but fundamental transformation towards becoming a technology-oriented business location. The German-Bulgarian Chamber of Commerce (AHK) survey shows that the companies surveyed invest an average of 8.5 percent of their investment volume in research and development, a figure that is exceptionally high for a location with this wage level and indicates a significant shift in the vertical integration of value creation.

This development aligns with practical examples such as the aforementioned company SEVIC Systems, which, in addition to its manufacturing operations, maintains its own development office in Bulgaria and independently optimizes production processes there. Other German companies, such as the refrigerator manufacturer Liebherr, have also established themselves in the Trakia Economic Zone, a large industrial area with direct motorway access that has become a regional cluster for European supplier structures. Bulgaria is thus positioning itself not merely as an extended workbench for labor-intensive manufacturing, but increasingly as an integral part of European innovation chains, particularly in the fields of information technology, engineering, and semiconductor technology.

This increased emphasis on vertical integration also has structural consequences for the labor market. 85 percent of the companies surveyed intend to maintain or increase their workforce, and 33 percent are planning concrete workforce growth. These figures directly reflect the positive macroeconomic environment, as an unemployment rate below 4 percent simultaneously signals rising purchasing power among the population, which in turn supports domestic demand and sets a self-reinforcing economic cycle in motion.

Skills shortage and bureaucracy as the final hurdles

Despite the overall positive assessment of the location, the surveyed companies identified clear structural challenges that could hinder further expansion. Administrative predictability and the acceleration of bureaucratic processes ranked third among the concerns raised. Eighty-two percent of the companies called for more stable framework conditions, primarily aimed at the predictability of regulatory decisions. Faster approval processes, single points of contact for foreign investors, and the consistent digitalization of public administration are measures that could have a significant impact at comparatively low fiscal costs.

Bilingual and multilingual professionals have traditionally been considered one of Bulgaria's key competitive advantages, particularly in the fields of technology, finance, procurement, and human resources. At the same time, the increasing outsourcing of knowledge-intensive activities is also intensifying the pressure on the local labor market for qualified personnel, as the demand for specialized IT and engineering professionals is growing faster than the education system can supply the necessary qualified staff. This development is by no means unique to Bulgaria, but rather affects virtually all Central and Southeastern European locations that have benefited from the nearshoring trend in recent years. However, it also poses a real risk to the sustainability of this growth trajectory.

Regional classification: Bulgaria in the competition among nearshoring locations

Compared to other Central and Southeastern European locations, Bulgaria performs above average in several key categories. The following overview categorizes the most important location factors identified in the German-Bulgarian Chamber of Commerce (AHK) survey and supplementary macroeconomic data.

This combination of macroeconomic stability, fiscal discipline, and structural value creation explains why Bulgaria is increasingly gaining ground in competition with other Central and Eastern European locations such as Romania, Poland, and Slovakia. Particularly compared to Romania, which is also considered an attractive production location for German companies, Bulgaria scores points with lower national debt and the earlier adoption of the euro as its common currency.

Critical assessment: Between opportunities and structural residual risks

An objective assessment of the Bulgarian nearshoring boom cannot be limited to the predominantly positive figures from the German-Bulgarian Chamber of Commerce (AHK) survey, but must also consider alternative data sources. A survey conducted by the Bulgarian Chamber of Commerce among 847 companies in November and December 2025 paints a significantly more pessimistic picture from the perspective of the domestic economy: 66 percent of the Bulgarian companies surveyed expected an economic downturn in 2026, while another 13 percent anticipated no change. Compared to the previous year, this pessimism was already quite pronounced, though at 41 percent, it was still lower.

This discrepancy between the assessment of foreign, particularly German, investors and the sentiment within the domestic economy is highly relevant from an analytical perspective. It suggests that foreign direct investors primarily benefit from structural location advantages such as lower wage and energy costs, Eurozone membership, and geographical proximity, while domestic companies suffer more from domestic pressures such as rising living costs, inflationary pressure, and regulatory uncertainty following the currency conversion. A nuanced understanding of the Bulgarian nearshoring boom must acknowledge this dual reality: the location is structurally attractive to foreign investors, but this attractiveness does not necessarily translate into widespread satisfaction within the local economy.

Furthermore, the global AHK Business Outlook for spring 2026 paints a mixed, but by no means outstanding, overall picture for Bulgaria in international comparison. While Bulgaria's current business climate, with a positive balance of good and bad ratings, is in the positive range, it is not significantly above the average of many other Central and Eastern European countries. This puts the narrative of Bulgaria as an exceptional case into perspective and positions the country more as a solid, but not spectacular, member of a broader group of attractive nearshoring destinations within the European Union.

A differentiated location assessment

The analysis of available data supports the thesis that Bulgaria will expand its position as the preferred nearshoring destination for German companies in 2026 not despite, but to some extent because of, global uncertainty. Rising energy prices, geopolitical tensions, and the need for diversified supply chains are acting as catalysts for relocating production capacities closer to the core European market, and Bulgaria is benefiting disproportionately from this development because it combines low costs, sound fiscal policy, growing technological expertise, and, since joining the Eurozone, monetary stability.

At the same time, the parallel skepticism regarding overall economic development shows that companies are by no means acting blindly optimistically, but rather decoupling their strategic location decisions from short-term economic expectations. This ability to differentiate between structural location quality and cyclical economic fluctuations is ultimately the true definition of corporate resilience in a time of multiple global crises. Bulgaria thus provides an instructive example of how a medium-sized European location can become a reliable building block of the European supply chain architecture through the skillful combination of structural reforms, geographical proximity, and fiscal discipline, without obscuring the existing challenges regarding skills shortages, administrative complexity, and domestic distribution issues.

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