Looking Past the Static

As I was reading the news from across CEE last Sunday, I came across headlines showing that the far right was doing well in the current presidential elections in Austria – portending another in a series of victories by right wing parties across the region in recent years. Out go the old, in come the new.

As a not-unrelated matter, at CEE Legal Matters we regularly speak to lawyers in countries such as Turkey, Hungary, and Poland, among others, who express concern about how right-swinging national politics in their countries – or at least the manner in which political developments in their countries are seen by outsiders – might negatively influence investor appetites.

But this is not something new for CEE. And I’ve found myself thinking of the several conversations I’ve had with Partners in recent months making a completely opposite point and describing political changes – or concerns about them – merely as “static” or “noise.” Indeed, they’ve been describing these developments in terms that could be paraphrased as: “Look, there’s a lot of coverage of potential political risks associated with the country, but the reality is that investors are seeing past that static and are looking at the indicators that really matter.” And the happy bottom line to that analysis is that, if we look beyond the noise, there seem to be plenty of opportunities drawing investors into CEE.

It might be a bit of a stretch to claim that the the privatization-driven gold rush of the 1990s is making a return to the region. But if one looks at CEE closely, some positivity and optimism are justified. In our last issue’s Buzz section for Poland, we spoke to a Managing Partner of an international law firm who reported that despite concerns over how the new Polish Government might deter investments, it had yet to really do so. In this issue’s Market Spotlight Round Table on the Hungarian legal market, participants reported that, despite a Government perceived to be interventionist, utilization rates are at their highest since before the 2007/2008 crash. In our regional energy report, we showed how, in Greece, for instance, as a result of the bailout deal, positive reforms are being implemented. And, as I also mention in our new section, The Chatterbox, when looking at basic indicators such as 2016 GDP forecasts, CEE countries are leading the pack among EU member states.

But there’s another element to this as well. As many of our readers know, I’m a Romanian national. As such, I can’t help but take some pride in seeing Romania regularly identified as one of the most bullish markets in CEE these days. What I find especially interesting is how much of the narrative put forward by the Romanian media suggests that the considerable improvement in the country’s economic performance resulted from the country’s most recent presidential elections. That may or may not be true, or entirely true, but in any event it leads me to a fundamental consideration: If in CEE new leaders are hailed for bringing about structural change in markets, and if we have markets where new or prospective leaders are feared for the structural changes they might bring – while all these countries seem to be growing at a considerably healthier rate than in recent years – then we need to be looking at more than merely the political noise as responsible for the success or failure of the economies in these markets.

From our side, we’ll continue to do our best to dig beyond the static. We look forward to your support in that mission.

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This article is the editorial of the latest issue of the CEE Legal Matters magazine. The full issue can be accessed by subscribers here.