The team of Sofia Investment Agency published its new report titled ‘Sofia: Economic and Investment Profile’, developed by the Institute for Market Economics for Sofia Investment Agency. The paper contains data and analysis of the leading industries, the target sectors for investments, the importance of infrastructure, local taxes and business conditions, as well as information about Sofia’s performance in comparison to other popular business destinations in the region.
Key report highlights:
- – Sofia is thе city with the highest living standard in Bulgaria, producing about 40% of the country’s GDP.
- – The biggest change in the structure of Sofia’s economy, following the recession in 2009, was the crisis in construction: its share in the local economy declined from 11% in 2008 to below 5% in 2017. At the same time, the manufacturing industry increased its weight in the local economy, following a series of investments in new manufacturing facilities and already existing ones reaching a share of 10.4% in Sofia’s economy. Stable growth is observed also in the sectors of Administrative and Supporting Activities and Professional Activities and Research (which also include part of the outsourcing industry and the IT sectors). This shows the ability of the local economy to attract and develop precisely such types of businesses.
- – Being the main economic centre in Bulgaria, it is no surprise that Sofia attracts about half of the investments in the country: by the end of 2017, the city had attracted EUR €12.2 billion of foreign investments or about EUR €9.200 per capita, which is nearly three times the average for the country.
- – The largest recipient of FDI in Sofia is the large sector of Trade, Transport and Tourism that attracted about 34% of all foreign investments by 2017. The second largest recipient of foreign investment are Real Estate Operations, attracting about 20% of all FDI in Sofia.
- – Sofia has the highest employment rate of 75% – an absolute record both for the city and the country. The highest share of employment is in trade – nearly 180 000 people or 1/4 of the labour force in the city.
- – Since 2012, there has been a substantial rise in jobs in the IT industry and professional activities – a consequence of the boom in these sectors over the last few years. The number of employees in Administrative and Supporting Activities is also increasing, which can be partially attributed to the growth of the outsourcing industry.
- – In 2017, the average annual salary in Sofia was BGN 15 700, which is more than 30% higher than the average salary in the country – an increase by nearly 73% in the last 10 years.
- – None of the major local taxes and fees in Sofia Municipality changed during the last 7 years (2012-2018), indicating a relatively stable and predictable tax environment. The main differences in taxation between Sofia and the other regional cities in the country is in the levels of the patent tax for retail and the waste collection tax – both are significantly higher in Sofia.
- – In Sofia Municipality, the internet speed of 17 Mbps exceeds the average for the country, which is an important factor for the business development in the Capital. Sofia also has the largest share of households with internet access – 76% in 2017, while the average in the country was 67%. The city also ranks first in the number of people aged 16-74 who use Internet – 78% in 2017, compared to 66% for the country. All this comes to show that Sofia municipality provides good conditions for internet access and the relatively young and educated population uses it
According to the report, the Sofia region will continue to concentrate a growing share of the economic activities in the country. The highly qualified workforce will keep attracting investment in such fast growing sectors as the IT industry, the outsourcing of business services and some high value-added manufacturing activities.
Sofia is also very well-positioned to develop some new forms of economic relations such as digital and shared economy services. This is possible because of the suitable IT infrastructure: highly educated people, high average internet speed, a number of IT companies and specialists, but also because of the large size of the local population.
More detailed data, charts, analyzes and trends can be found in the full version of the report.
The ‘Sofia: Economic and Investment Profile’ report was developed by the Institute for Market Economics for Sofia Investment Agency.
If you have any questions related to the report or other data regarding the investment climate in Sofia, do not hesitate to contact our team at email@example.com.