2022 was an incredibly challenging year for Central & Eastern Europe and this year is not expected to be any different, with significant political, economic and security risks looming over the region throughout 2023.
Russia’s war against Ukraine will bring the largest set of risks for CEE this year, with severe security, political and economic implications. Governments across the region will continue to mitigate the impacts of the war, including the ongoing energy crisis, the expected economic downturn, spiralling inflation and rising living costs, while businesses face an uncertain economic environment with the risk of unwanted regulatory and budgetary changes.
While the EU is widely expected to remain united in supporting Kyiv, this year could see more tension between Brussels and both Poland and Hungary, both of which have long running disputes with EU institutions and are aiming to unlock €billions in post-pandemic EU recovery funding.
As in 2022, political instability is likely to be among the most pressing issues for international companies present in the CEE region. In the short term, Slovakia and Bulgaria will be the most impacted, with both countries likely heading for snap elections later this year, while Estonia and Poland are also scheduled to held much-anticipated parliamentary elections. Despite the challenges unleashed by the war and the risks arising from the political and economic difficulties, however, the region’s underlying stability means that CEE will remain both open for business and a safe destination for investors.
Below, Aretera presents its outlook on CEE for 2023, with a focus on political risks facing the region.