The singularity of political risk in Central and Eastern Europe
With the ongoing wave of elections in the Central and Eastern Europe region, CEE countries are experiencing a key period of change in a context of political risk and economic acceleration, which currently seem to be the two crucial issues attributed to the region. The region’s average GDP growth rate soared to 4.5% in 2017, i.e. the highest level since 2010. However, local politics and national judiciary system changes are creating problems for the region. Worsening relations with the European Union (EU) and a threat of sanctions for Poland have raised additional concerns.
Although the social risk has risen in the last decade – mostly in Hungary, according to results of the Coface risk model –, the CEE region is much less risky than other emerging regional markets. However indicators published by international institutions monitoring freedom and civil liberties within the political system show weakened assessments, with Poland joining Hungary as a cause for concern. Although CEE countries have made huge improvements in terms of corruption, it remains prevalent: Bulgaria, Hungary, and Romania placed last among European countries in Transparency International’s corruption index. Despite the numerous benefits that EU membership brings to CEE economies, they are becoming more and more “Eurosceptic”: according to the latest Eurobarometer results, the Czech Republic is the thirdmost Eurosceptic member of the community, despite its integration with Western Europe supply chains and strong EU trade links.
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