Publication 37 pages

Business risks and opportunities in CEE & SEE

18 March 2015

Solid recovery in Central and Eastern Europe is helping to “pull up” neighbours in the South-East of the region, and the cluster of nine countries across central and south eastern Europe is making the most of a weak euro and lower oil prices, according to two reports commissioned by TMF Group and released today.

Business risks and opportunities in Central and Eastern Europe, commissioned by TMF Group and published by The Economist Intelligence Unit, finds that the business environment for small and medium-sized enterprises (SMEs) is strengthening in several countries in CEE, particularly in the Czech Republic, Hungary, Poland and Slovakia. However, businesses still face challenges in the administrative, regulatory and tax environments. Find out more on CEE >

Meanwhile the CEEMEA Business Group found that South East Europe (SEE), which has been lagging behind in the recovery stakes, might now be worth a fresh look for those corporate executives under pressure to find growth globally. Find out more on SEE >

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Find out more about TMF Group in Bulgaria, Croatia, Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia and Slovenia.

Central and Eastern Europe:

The EIU report finds economic growth will be increasingly driven by SMEs in the region, which will continue to outpace the euro zone and wider EU. SMEs are benefiting from investment incentive schemes, improved funding opportunities and tax exemptions.

The report points out that the CEE region is seeing increased nearshoring (as opposed to offshoring) of manufacturing and service lines, particularly in Poland. Momentum for technology start-ups in countries such as Slovakia and Poland is rising. Moreover, the growth of shared service centres continues to offer major opportunities in countries like Hungary and Poland.

Yet, businesses operating in the region continue to face major challenges. The report highlights areas such as excessive bureaucracy and sector-specific taxation. Red tape in public sector procurement remains an issue in several countries. Despite low corporate taxes, taxation systems remain in need of reform. The risk of arbitrary legislation, such as sector-specific taxes, is a problem.

South East Europe:

South East Europe (SEE), which has been lagging behind in the recovery stakes, might now be worth a fresh look for those corporate executives under pressure to find growth globally, according to the CEEMEA Business Group in research commissioned by TMF Group.

Companies that are expanding their business in the SEE region look to benefit from the generally stable economic growth, as well as corporate tax levels that are lower than in majority of Western European countries. SEE countries (Bulgaria, Croatia, Serbia and Slovenia) are home to around 20 million people in total, and international business is looking at these locations for new growth potential.

Companies are expecting these markets to grow, putting Bulgaria and Serbia on the top 10 countries by expected organic growth in 2015.

While SEE continues to offer growth opportunities, there are also risks for businesses. Potential investors and international companies have to be well prepared to deal with the risks and get support of the local experts that have vast experience of dealing with the rapidly-changing legislative and regulative environment. Risks also remain from any slowdown/deflation in the Eurozone and any worsening of the crisis in Russia and Ukraine.

Find out more about TMF Group in BulgariaCroatiaCzech RepublicHungaryPolandRomaniaSerbiaSlovakia and Slovenia.

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