Letter from the editor
For nearly a decade SeeNews has been following the corporate sector of Southeast Europe (SEE) as it zigzags through the rough local economic terrain. Weak institutions, poor infrastructure and excessive dependence on foreign markets have remained constant elements of the picture. To these, the past year added political instability and election-related macroeconomic weaknesses in some countries, alongside new geopolitical pressures – an intensifying refugee flow, Britain's decision to exit the EU, and strained relations between the bloc and Russia, a traditionally major investor and trading partner for the region. To help the SEE countries tackle these challenges – both external and domestic – international financial institutions such as the IMF and the EBRD, as well as the EU itself, have been pouring cash into the region, while at the same exerting pressure for reforms and improvement of the business climate. All in all, economic activity in SEE picked up and this is eventually starting to show in the companies' bottom lines.
The combined revenues and earnings of the entrants in the TOP 100 SEE companies ranking edged up in 2015, following a decline a year earlier.
The increase, however, remained below the region's average GDP growth, suggesting that corporate majors have been slow to adapt to the changing environment. From a positive perspective, however, it points to an untapped potential for growth.
Expectations that the corporate sector is headed for better times are further underpinned by projections that economic growth will strengthen in the coming years. Combined with the ongoing EU integration and inflow of EU funds, more efficient judiciary and improved business environment, this will provide a solid base for higher revenues and profitability.
The economic pick-up has been a tailwind for one industry in particular and that is retail and wholesale, which comes as little surprise given that household consumption was the main driver of economic growth in the region.
The winner of the TOP 100 SEE ranking also is only too logical – a company based in the region's biggest and fastest growing economy, in a sector that has been making the best of Southeast Europe's cheap skilled labour and proximity to global markets. And an illustrative example of what Tomasz Telma, IFC regional director Europe and Central Asia, says in an exclusive interview for this publication: “Some countries can be a little bit more deliberate and persistent in going through the mapping of their economy and trying to figure out how to make themselves attractive to those foreign investors who are making choices.”