SOFIA - Bulgaria’s economic outlook may be gloomy but Dragomir Kouzov, founder of bicycle manufacturer Drag and one of a new breed of niche entrepreneurs in the EU’s poorest country, is anything but.

“My motto is ‘I believe,’” the smiling and energetic 52-year-old former professional cyclist, enthused to AFP, one of his state-the-art two-wheel creations suspended on the wall behind him.

“We Bulgarians have a big chance to succeed in niche segments. Here there is cheap manual labour, creativity, innovation and the designing of original products.”

Times are tough in Bulgaria, politically and economically.

The last government resigned almost a year ago after a wave of public protests and few experts expect the deeply unpopular current administration to hang on much longer.

Around a million Bulgarians, including many of the brightest and the best, have left the country since the fall of communism 25 years ago.

On January 1 Bulgarians gained full freedom of movement in the entire European Union after eight countries including Germany, Britain and France dropped all remaining restrictions.

Foreign direct investment into 7.4-million-strong Bulgaria has slumped from 6.6 billion euros ($9.0 billion) in 2008 to a meagre 1.4 billion euros in 2012.

This has made exports, two-thirds of which currently go to the rest of the EU, hugely important.

In communist times, Bulgaria used to supply computers, canned food and armaments including AK-47 assault rifles to the whole of the Soviet Bloc, but those days are long gone.

Nowadays it relies heavily for exports on a Russian-owned oil refinery and a German-run copper smelter, and the Balkan country remains a major agricultural exporter.

According to the Bulgarian Industrial Association (BIA), Bulgaria is the world’s top provider of grains used for breakfast cereals — muesli and flakes — with a fifth of world exports in 2012.