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In 2013 Chinese president Xi Jinping unveiled the One Belt and One Road Initiative - a development strategy under which China plans to invest hundreds of billions of euro in other countries in Asia and in Europe in a bid to strengthen its role in global affairs. The strategy focuses on projects in transport infrastructure, energy, iron and steel. Countries in SEE fall within the strategy's scope, with Serbia attracting the most generous share of Chinese investments.

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.

The automotive industry generates an ever increasing share of the value added of the economies of Southeast Europe. In 2017 a total of 629,014 vehicles were manufactured in the region, according to the International Organization of Motor Vehicle Manufacturers (OICA). In 2017, annual growth rates of 9.7% in the region significantly exceeded the European average of 3.1% and the global average of 2.4%. This can be explained with the constantly increasing demand for new cars in line with the overall sound economic growth in SEE, paired with consumers’ preference for local brands, especially in Romania, the region’s largest market. Passenger car assembly in SEE is concentrated in three countries – Romania, Slovenia and Serbia.

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.

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.

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.

Britain's decision to leave the European Union has unleashed volatility on the global markets, and SEE is no exception. The full impacts of the vote are still impossible to predict but for once analysts seem unanimous that the balance would be negative for most of us. However, whereas EU members in the region are mostly concerned about the economic repercussions of a potential Brexit, for candidates to join the bloc the biggest fears are that it may thwart their accession plans.

The EU’s slow and disjointed response to the massive flow of refugees and migrants from the Middle East and North Africa left Southeast Europe in an unprecedented emergency. In March Slovenia sealed its borders to migrants, triggering a domino effect further south along the so called Balkan migrant route with Croatia, Serbia and Macedonia following suit. The move led to tension on the Greek-Macedonian border where thousands remained trapped, and put Bulgaria under increased pressure from illegal migrants.

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