As with many global sub-regions, southern and eastern Europe (SEE) is slowly emerging from a period of stark economic slowdown as a result of the Covid-19 pandemic, with regional economies affected in a variety of ways. This ranged from tourism-reliant nations such as Croatia and Greece that faced an unprecedented plunge during 2020, relying on EU relief and revived capital spending intervening to restore growth, to Romania, whose resource-rich economy suffered from a decline in industrial production, only to recover during Q3 2020 after foreign trade and investment – particularly from Germany – resumed in earnest.
Although granular policy details have differed, governments have intervened to prevent the spread of Covid-19, while also seeking to protect key economic sectors and also balancing consumer demands and differing political situations. A number of SEE countries faced elections during the pandemic, a situation that has broadly favoured incumbents. Both the Romanian and Bulgarian governments returned, albeit facing a significant loss of support and ongoing questions over their futures, while control of the Cypriot House of Representatives shifted to the conservative opposition.
Economic growth is expected to return to the region broadly, though central banks anticipate increased inflation, and in some areas have acted to hike interest rates, which may affect consumer demand and household spending. Similarly, anticipated tapering of fiscal support measures may see labour markets react more sluggishly than the wider economy – particularly capital markets, M&A, and natural resources transactions.
Naturally, the picture differs across jurisdictions, with legal practitioners across SEE reporting varying levels of optimism across a number of market sectors, and positive signs regarding transactional work has been reported. Law firms have sought to react to these trends and changes, further coloured in contrast to previous economic downturns by a need to look inwardly and change working practices in the light of the pandemic.
An analysis of five SEE jurisdictions, alongside that of nearby Ukraine, which is increasingly integrated with Europe, reveals the state of the region’s legal markets, economic outlooks, and expectations for a post-pandemic future.