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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.

Croatian citizens last month voted for parliament for the second time in less than a year. The early elections were scheduled in July, following the dissolution of parliament - the culmination of a months-long long political crisis. Following the vote in which the conservative HDZ won 61 of the 151 seats in parliament versus 13 for centre-right MOST, the two formations reached an agreement to form a coalition government. The new government will also rely on support from deputies representing ethnic minorities and some smaller parties.

Serbia's president Tomislav Nikolic dissolved parliament in April and called early elections at the proposal of prime minister Aleksandar Vucic, who was seeking broader public support to push through overdue reforms. Vucic, however, will control 27 seats less in the new parliament, final official results showed. The SNS-led coalition won 48.25% of the votes.

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.

Rumen Radev, a former Air Force commander backed by the opposition Socialist party, won Bulgaria's presidential elections on November 13, defeating the candidate of the ruling centre-right party GERB, parliament speaker Tsetska Tsacheva. The election outcome prompted prime minister Boyko Borissov to submit the resignation of his minority coalition cabinet.

The recent boom of low-cost carriers across Southeast Europe (SEE), particularly in Romania and Bulgaria, has created a new market which complements legacy airlines. Rising low-cost passenger numbers, especially in Romania and Bulgaria, are closely linked to the double-digit growth of international tourists to both countries in 2016. According to Bulgarian finance ministry data, more than 56% of foreign tourists who visited the country last year arrived by low-cost flights.

Bulgaria will hold early general elections on Sunday, four months after the resignation of the minority coalition cabinet led by centre-right GERB party. GERB's cabinet stepped down in November after the party's candidate in the presidential elections, Tsetska Tsacheva, lost to the Socialists-backed candidate Rumen Radev. A caretaker government, led by former parliament speaker Ognyan Gerdjikov officially took office on January 27.

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.

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.