In 2006 Bulgaria registered growth of 6.1 per cent against 3 per cent in the EU-27. Major drivers of national growth include a thriving private sector and growth in investments.

Accelerated investment activity contributed to a dynamic industry sector which registered growth of 8.3 per cent in 2006 and is generating over 31 per cent of the value added in the economy. Manufacturing excels among industry sectors with real growth in value added of 19 per cent in the fourth quarter of 2006 against the same period of 2005, growth in construction stabilizes at levels about 10 per cent, whereas the other two industry sectors register decline (27.5 per cent in generation of electricity and thermal energy and 17.7 per cent in mining and quarrying).

GDP per capita registers positive development, going up from 25.6 to 35 per cent of the EU average in the period 1997-2005. On the other hand, analyzed as a labor productivity measure, the indicator stands at EU lowest levels.

Industry in Bulgaria- Overview

Manufacturing industry in Bulgaria is the most important industrial sub-sector with a share of 73 per cent in its value added. Manufacturing industry has a substantial share in the country's gross domestic product. It accounts for almost 18 per cent of value added created in the economy.

  
In 2005 products of the manufacturing industry amount to BGN 31.5 billion (Table 1.2) and 40 per cent of them are sold on the international market. Value added created in 2005 amounts to over BGN 6.2 million.

The gross operating surplus of enterprises in the sector in 2005 amounts to BGN 3.3 billion, i.e. 53.4 per cent of value added remains with employers and the other BGN 2.9 billion or 46.6 per cent of value added are personnel costs (BGN 2.1 billion in the form of salaries and wages and BGN 0.7 billion for social charges). During the year gross investment in fixed assets in manufacturing amounts to BGN 2.7 billion, including 66 per cent for equipment.

In 2003-2005 the share of manufacturing in value added grows while in employment declines slightly as a result of the faster productivity growth in manufacturing than in the other sectors of the economy. The following industry sectors account for the highest shares in value added in manufacturing in Bulgaria:

• Food processing - 14.3%,
• Machine building - 9.6%,
• Production of coke and petroleum products - 9.4%, and
• Apparel - 8.9%.

Three of these industry sectors have the highest shares in employment

• Apparel - 22.4%,
• Food processing - 16.6%, and
• Machine building - 10.4%.

The Apparel industry creates high value added share, accounting for a large share in total manufacturing value: 4 per cent, against 1.2 for EU. This is due to the positioning of the Bulgarian production in a specific production niche: toll processing.

The low perspective of such production, which rests exclusively on the advantage of low labor costs, is compensated by high specialization and considerable restructuring of the industry sector in the recent years, which would probably help Bulgaria retain its competitive position in the region.

The trend is for the production of apparel in CEE to shrink due to high competition from Turkey and China. Another important factor for industrial development is good Bulgarian traditions in the production of textile.