There are visible signs that the globalfinancial crisis is affecting economic growth and povertyreduction in Bulgaria. After a period of strong economicgrowth through 2008, Gross Domestic Product (GDP) in 2009 isprojected to shrink by 3.5 percent due to the crisis, withimportant implications for poverty. The note identifies thefollowing channels as having particular relevance forpoverty in Bulgaria: (i) the labor market and (ii) foreignremittances. Due primarily to its effect on trade andinvestment, the global financial crisis could affecthousehold welfare through contraction in the labor marketand slowdown in wage growth. Remittances from abroad, whichare significant contributor to consumption of nearly 7percent of the Bulgarian households, are likely to slow downin 2009. The note estimates the potential impact on povertyof the crisis. The poverty impact is projected by simulatingthe effects of the anticipated slowdown in growth andremittances on household consumption using data from the2007 Multitopic Household Survey (MTHS) and macro andsectoral growth and employment projections. Givenuncertainties regarding the scale of the crisis and howhouseholds are likely to cope, the note is intended toprovide indicative estimates of the poverty impact of thecrisis, rather than precise estimates.