For CEE, 2022 was a tumultuous year. What will 2023 bring?

For CEE, 2022 was a tumultuous year. What will 2023 bring?
January 16, 2023

Russia’s all-out invasion of Ukraine made 24 February 2022 a date that the whole world will remember. The largest European military offensive since World War II unleashed a series of economic, social and humanitarian crises across the CEE region, Europe and globally.

On top of the enduring and unthinkable human tragedy of the Ukrainian people, Russia’s actions have significantly elevated security risks facing the European continent and in particular Central & Eastern Europe. Unprecedented crises across energy, migration, global food supplies and beyond continue to shape the region’s political agenda.

Combined with the energy crisis, the war has put an enormous burden on European economies, with the continent braced for an economic downturn in 2023 and trying to tackle spiralling inflation. The resulting budgetary strain has also led to a number of direct and/or indirect austerity measures in many countries. This comes as Europe has also had to face an unprecedented humanitarian and refugee crisis in the first half of 2022.

After a tumultuous election season in 2021, last year was short of electoral contests in the region, however all of last year’s elections held crucial implications. Amidst an uncertain domestic and international environment, Hungarian Prime Minister Viktor Orbán and Serbian President Aleksandar Vučić both easily secured re-election in their respective national elections in April 2022. While both Serbia and Hungary voted for the continuation of the “illiberal” course, Slovenia turned centre-left, elevating Robert Golob and his then-newly created Freedom Movement into power. Elsewhere in the region, Latvia’s pro-EU ruling coalition led by Prime Minister Krišjānis Kariņš was re-elected for a second term.

Bulgaria’s latest snap elections - triggered by the collapse of the reformist government of ex-Prime Minister Kiril Petkov last summer - have produced yet another hung parliament. Going into 2023, it remains unclear whether the latest snap vote - the third consecutive held since the inconclusive parliamentary elections of April 2021 - will eventually lead to a stable government.

As in 2021, the key political risks to follow also included unstable governments and ruling coalitions. Following months of internal disputes, Slovakia’s centre-right coalition government, led by Prime Minister Eduard Heger, first lost its parliamentary majority in September and then collapsed three months later. As in the case of Bulgaria, it is yet to be seen whether the country will head for snap parliamentary elections or take another direction.

From the perspective of political stability, 2022 turned out to be challenging for Montenegro, as well, after Dritan Abazović’s government collapsed in a no-confidence vote last August, while the country’s enduring political impasse has also impacted its local elections and the system of its public institutions.

2022 ended with crucial implications for CEE countries, not least to international companies present in the region. Last December, EU member states – under an agreement brokered by the Czech Presidency of the EU – unlocked €billions in EU recovery funding under the bloc’s post-pandemic economic recovery program for Hungary. In turn, the Hungarian government dropped its months-long opposition to joint EU financial aid to Ukraine for 2023 and approved the 15% global corporate minimum tax within the EU, albeit in exchange for a national exemption. Poland has also been locked in long-running disputes with EU institutions over alleged breaches of the rule of law; talks with Brussels to finally unlock much-needed EU recovery funds are ongoing.

· What are the main risks facing Central and Eastern Europe this year and how will the countries of the region mitigate them?
· What are the short-term political and economic implications of Russia’s war against Ukraine in 2023?
· Which countries of the region are the most likely to be impacted by political instability and for what reasons?
· What can we expect from the main electoral contests in the coming months? What political risks should international businesses with a stake in the region calculate with and how can they prepare for them?

These are the main questions Aretera will try to unpack and discuss during its year-opening webinar, along with the main political developments and risks for CEE in 2023.

In order to participate, please register by clicking here by 18^th January, end of business.