Sofia Attracts Half of the Total Investment in the Country, Shows SIA Latest Report
At the end of 2016 Bulgarian Institute for Market Economics prepared an “Economy and Investment Profile of Sofia” report for Sofia Investment Agency.
According to the report Sofia is the biggest district economy in Bulgaria. About 39% of the country’s GDP is produced here. Sofia also attracts about half of the total foreign investment in the country. According to recent data, about 49% of fixed asset expenses and about 54% of foreign direct investments were made in Sofia.
The service sector accounts for the biggest portion of the municipal economy and it is not a surprise that most of the investments were made in that sector. Among the most attractive sectors for foreign investment in the capital were also the “industry and utilities” sector, real estate, IT and outsourcing.
Apart from attracting economically active people from other regions, Sofia is also characterized by the concentration of highly qualified population. While in Bulgaria the average proportion of university graduates is 28%, in Sofia it is almost double at 50%.
Sofia offers a relatively good infrastructure connectivity. It is one of the main railway hubs in the country. It is a part of three European transport corridors and the starting point of several motorways that connect the capital with the Black Sea coast and the national borders with Turkey, Greece and Serbia.
Sofia offers a relatively good infrastructure connectivity. It is one of the main railway hubs in the country. It is a part of three European transport corridors and the starting point of several motorways that connect the capital with the Black Sea coast and the national borders with Turkey, Greece and Serbia.
According to the report, the city will continue to attract a growing share of the country’s economic activity.
The growth will be attributed to the positive demographic trends and Sofia’s leadership position in the fastest growing economic sectors. The highly qualified workforce in Sofia will keep attracting investment to the rapidly growing IT industry, the business services sector, plus high-value added industrial activities. The growth will also be aided by the suitable IT infrastructure, the highly educated workforce and fast speed internet.
The gross domestic product (GDP) of Sofia was about 39% of the national GDP. Sofia’s economy is dominated by the service sector which accounted for 85.9% of the district’s GDP. The industrial sector contributed another 13.9% and agriculture had a symbolic share of 0.2%. Professional activities find good conditions for growth in Sofia due to the combination of highly educated workforce (including technical qualification), high degree of foreign language proficiency and relatively low labor costs.
The capital continues to be the most attractive destination for foreign direct investment (FDI) in the country, attracting about 54% of the total FDI. Cumulative investment in Sofia year to date amounted to 11.7 bn. euro or 8 857 per capita, compared to 3 007 euro per capita in the rest of the country.
The largest recipient of FDI in Sofia was the wider sector of trade, transport and tourism, with a share of about 30%. The second largest recipient of foreign investment is the real estate sector – with about 20%. Industry and public utilities came third with 18%. The sector of “Creation and distribution of information and creative products; telecommunications” was also among the most attractive sectors for foreign investment with 15% of the total FDI. The sector includes all IT businesses.
The local tax environment in the capital is stable and predictable. None of the basic local taxes and fees have increased in the last 5 years.
All figures and the full report in English are published in the section Market Analysis & Business Insights on our website.
