Mall of Sofia with IMAX cinema

Bulgaria's economy contracted dramatically after 1989 with the loss of the market of the Council for Mutual Economic Assistance (COMECON) member states, to which the Bulgarian economy had been closely tied. The standard of living fell by about 40%, but it regained pre-1990 levels in June 2004. United Nations sanctions against Yugoslavia and Iraq took a heavy toll on the Bulgarian economy. The first signs of recovery emerged in 1994 when the GDP grew and inflation fell. During the government of Zhan Videnov's cabinet in 1996, the economy collapsed due to lack of international economic support and an unstable banking system. Since 1997, the country has been on the path to recovery, with GDP growing at a 4% - 5% rate, increasing FDI, macroeconomic stability and European Union membership.

The former government, elected in 2001, pledged to maintain the fundamental economic policy objectives adopted by its predecessor in 1997, i.e., retaining the Currency Board, practising sound financial policies, accelerating privatisation, and pursuing structural reforms. Economic forecasts for 2005 and 2006 predict continued growth in the economy. The annual year-on-year GDP growth for 2005 and 2006 is expected to total 5.3% and 6.0%, respectively. Industrial output for 2005 was forecast to rise by 11.9% from the previous year, and for 2006 by 15.2%. Unemployment for 2005 was projected at 11.5% and for 2006 about 9%. As of 2006 the GDP structure is: agriculture 8.0%; industry 26,1%; services 65.9%.