Let­ter from the ed­i­tor

Top 100 See - - Editorial - Siana Mishkova Ed­i­tor-in-chief

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.”

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