Central and Eastern Europe After the Boom - Time for a Stragegy Change for Foreign Multinationals?
Central and Eastern Europe After the Boom - Time for a Stragegy Change for Foreign Multinationals?

Summary/Abstract: In 2008 the global financial and economic crisis ended a six-year-long boom period with an average growth rate well above 5% in Central and Eastern Europe (CEE). Although not the originators of the crisis some CEE countries such as the Baltic States and Ukraine were among the worst hit by this economic downturn. The crisis did not only shatter the financial markets, banks and the real economy but also the growth image of CEE. The huge market potential and expected higher growth rates resulting from the catching-up process to West European standards have been the main reason for the flood of foreign direct investments into the countries of the region in the two decades before. Suddenly, foreign direct investors were confronted with stalled and even collapsing market growth, shrinking disposable household income, business customers and partners on the verge of bankruptcy and no real sign of a quick recovery. While the situation improved a little in 2011, the economic outlook and the sentiment of foreign investors have remained gloomy, at least for parts of the region. It is obvious that when faced with such a huge economic downturn companies stop geographic expansion and put the brakes on investments.

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