Digitization can Increase Bulgarian GDP by EUR 8 Billion by 2025
Digitization can be the next major driver of Bulgaria's growth and so our country can add up to 8 billion euros to its gross domestic product by 2025. And for the entire CEE region, the contribution could be 200 billion euros, according to a report "The Rise of Digital Competitors: How Digitization Can Become the Next Engine of Economic Growth in Central and Eastern Europe" by McKinsey, a global consulting firm, reports Mediapool.
The report measures the size and growth rate of digital economies at regional level in ten countries: Bulgaria, Latvia, Lithuania, Poland, Romania, Slovakia and Slovenia, Hungary, Croatia and the Czech Republic.
The analysis recognizes that between 1996 and 2017 the ten and the Central and Eastern European countries examined in this report reported an average 114% increase in GDP per capita, but in recent years traditional growth engines have started to weaken.
Economies in Central and Eastern Europe, including Bulgaria, are less capitalized compared to more advanced Western Europeans (the capital is 80% lower than in the largest EU countries), labor costs are growing at low and record low levels - an average of 5.2% in 2018 in Bulgaria. In addition, labor productivity lags behind Western Europe.
However, digitization may add an additional GDP per year to Bulgaria by 2025 and lead to a rise in the digital economy's share of today's 5.2% to 16% of GDP after six years, McCain's analysts say.
They point out that today the digital economy in Bulgaria represents a comparable share of GDP in the EU's largest five markets (6.7% vs. 6.9%), but lags behind digital leaders such as Sweden, where this share reaches 9%.
Nevertheless, the digital economy in Bulgaria has grown more than two and a half times faster...