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An emergency government decree that eases penalties for corruption offences has triggered the biggest street protests in Romania since the fall of Communism. Protesters see the decree as an attempt to weaken the fight against corruption and help politicians avoid criminal prosecution on graft charges. The decree prompted harsh reaction on the part of the European Commission, the embassies of Western countries in Bucharest and business organisations, including AmCham in Romania. President Klaus Iohannis has said he will challenge it at the Constitutional Court.
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. In 2015 the value of M&A deals in Central and Southeast Europe (CSEE) rose 16.6% to 43.1 billion dollars ($38.4 billion), with IT and manufacturing as the most attractive sectors, according to recent date of global consultancy EY.
The banking systems of the countries in Southeast Europe are largely seen as stable and economic recovery is expected to further support lending, in particular in countries which have been lagging behind so far. NPL ratios, which are currently high in some countries, are expected to decline. In Bulgaria, the forthcoming asset quality review of the banking system is likely to lead to the sale of bad loan portfolios and speed up the process of market consolidation.
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.
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.