The European Commission said it expects Bulgaria's economic growth to accelerate to 1.7% in 2014 and 2.0% in 2015 as domestic demand recovers and complements exports.
"After contracting last year, overall investment this year and next is set to resume growth driven by both public and private investment, thanks in part to accelerated absorption of EU funds," the European Commission said in its 2014 Spring Forecast.
In 2013 Bulgaria's gross domestic product (GDP) grew by a real 0.9%.
The European Commission expects exports to continue growing at a moderate pace in 2014 and 2015, sustained by the recovery of the EU as a whole.
Risks seems tilted to the downside but the country's energy dependency on Russian gas could become a burden to growth in case of supply disruptions, the Commission noted.
"Also, the expected recovery in private consumption could prove weaker than expected, given that the Bulgarian labour market is still fragile," it added.
In the next two years Bulgaria's labour market is expected to stabilise further but remain weak overall.
"Unemployment is projected to decline only marginally to 12.5% in 2015 since many of the unemployed have difficulties re-entering the labour market," the Commission said.