Valentin Kardamski
It is no longer a forecast but a reality: the global economy is entering a new phase of tension that could escalate into an open worldwide crisis. In recent weeks, media outlets—from Reuters to Bloomberg—have reported a sharp increase in market volatility, sell-offs in tech stocks, and a flight to safe-haven assets. This is already a signal that investors sense a much deeper shock approaching.
The causes intertwine on several levels. High interest rates are suffocating lending, inflation remains stubborn, global conflicts are piling pressure on energy and resource markets, and supply chains are beginning to crack again. Central banks have found themselves in a trap—if they lower interest rates, inflation will surge; if they keep them high, the economy will contract. This dynamic is setting the stage for a worldwide recession.
In addition to traditional financial risks, cryptocurrencies are also experiencing significant shock despite having served as a supposed safe harbor for finances: Bitcoin and Ether have dropped sharply in recent weeks, with Bitcoin falling below key levels under $100,000 and Ether losing more than 20%. This compounds a crisis of confidence in digital assets, further destabilizing markets and increasing global risk.
This is why the crisis is now a matter of when, not if.
One of the most dangerous themes is the inflated real estate bubble in Europe. Prices rose for years due to cheap credit, and now, with high interest rates, the market has frozen. Stagnating demand, indebted households, and fears of bankruptcies in the construction sector create the conditions for a sharp correction. This crisis may turn structural—similar to the period just before 2008.
Added to this is the geopolitical factor. The war in Ukraine is entering its final stage, and Europe continues to pour resources into Kyiv. Just days ago, Ursula von der Leyen requested more than $135 billion for Ukrainian funding and arms—an enormous burden on already weakened European economies. France and Germany, the two engines of the EU, are struggling: France with debt, Germany with a lack of innovation and expensive resources. When precisely these countries enter recession, the entire eurozone begins to shake.
And here comes Bulgaria. Our economy is entering its most complex moment in more than a decade. Inflation is accelerating again, the budget is overstretched, and expenditures are rising faster than revenues. The country remains highly dependent on European economic conditions—and Europe is headed downward. The entry into the eurozone, which was supposed to be a stabilizing factor, is turning into a risk: we lose independent monetary policy, prices will rise, and businesses and households will feel the weight of high interest rates.
Additional pressure comes from record-high electricity prices for businesses, which have been the highest in Europe for an entire month. This is a direct blow to competitiveness. Many companies now face a choice: raise prices or cut staff. In both cases, the effect on the economy is negative.
Against this backdrop, discussions are emerging about whether the current government is planting “mines” in the budget—meant to explode in the hands of the next administration in the event of planned early elections. Excessive spending, unrealistic forecasts, and political instability create a sense of deliberate chaos. And when the outside world is trembling, internal irresponsibility becomes even more dangerous.
The conclusion is clear: Bulgaria must raise the red light. Budget discipline must be tightened, reserves must be built up, and spending must be reduced. Next year could be a shock for Europe, and our country must be prepared to face the storm. The economic avalanche is already rolling. The question is not whether it will reach us, but when—and in what condition it will find us.