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Activity in the region has benefited from lower oil prices and the gradual recovery in the euro area, but elevated corporate debt is hindering private investment, according to the IMF’s latest World Economic Outlook report. The World Bank, for its part, has commented that a notable revival of investment underpinned economic growth, particularly private investment - both foreign and domestic. Exports are also helping to fuel this growth. Improving productivity, however, remains pivotal for boosting growth in the region.
As Southeast Europe returns to steady economic growth, the mergers and acquisitions (M&A) market in the region is picking up again and an increasing number of both local and foreign investors push ahead with expansion plans. Romania holds the largest share of the region's M&A market, as the value of deals struck in the country last year is estimated at $3.54 billion (3.58 million euro), according to global consultancy Ernst&Young (EY). The most active M&A sectors in the region are IT, manufacturing, and wholesale&retail.
Macedonia held early election in December as part of a EU-brokered deal that aimed to resolve a protracted political crisis. The crisis began in January 2015, when SDSM's leader Zoran Zaev, then in opposition, accused the coalition government of VMRO-DPMNE and DUI of corruption, illegal wiretapping of more than 20,000 people and covering-up a murder. The conservative VMRO-DPMNE won a close victory against SDSM in the election, but failed to agree with ethnic Albanian party DUI on the formation of a coalition government after talks stumbled over the official use of Albanian language in the country, among other issues.
Croatia's largest privately-held concern Agrokor has been in financial turmoil since January when global ratings agency Moody's downgraded its corporate family rating (CFR) to B3 from B2. Following Moody's decision, Agrokor pulled out of a syndicated loan deal it had struck with several international lenders, which sent the price of its bonds on international markets into a downward spiral.
The eletricity market of Southeast Europe is heating up after earlier in 2016 day-ahead power exchanges were launched in Bulgaria, Croatia and Serbia, opening up new opportunities for energy producers, consumers and traders. As a step towards achieving market coupling, in April the power transmission system operators, regulators and energy ministers of six countries in the Western Balkans signed a memorandum of understanding on the integration of their day-ahead markets.