World Risk Guide – Central Eastern Europe (part 1)
The last part of Europe, that we haven’t covered has this area of Eastern Europe grow tremendously, especially with various political conflicts and economic showdowns which has increased this side of Europe significantly, specifically over the last twenty years or so. This part concentrates on the area which was already in existence, bar Czech Republic and Slovakia which peacefully dissolved from one another in 1993.
The following looks at the rise of each of the below countries in turn, and looks at both their Credit Risk and Legal activity within the area.
(Risk Ratings in understanding Risky Customers are between 1 and 5, with 1 being the lowest and 5 being the highest.)
Fortunes for this first independent ex-Russian stowaway reached a new climax, when it joined the EU in 2004. Since then, its economy has experienced wonders in becoming a booming nation, with a growth in imports and exports. Despite high unemployment in most parts of Poland, it still thrives on being a great economic nation, especially as it has teamed up with Germany who is a key driving force in attracting a lot of foreign investment internally.
Likely to go strength to strengh, they are now looking for greater integration within Europe, and even looking to join the single currency, so as to gain greater consistency with its Western neighbours.
Generally commentators are giving this region an average credit rating, and with no experience of any notable legal action in this area, its something that I agree with.
Risk Rating = 3
Like that of Poland, and noted as a “velvet divorce” from Slovakia, being that it was a peacefully concluded, a departure from the Communist regime saw fit to a larger and better established economy, especially since 2004. However, as the global recession has caused many a catastrophic failure like its Western European counterparts, Czech Republic saw a downturn in its economic prowess.
Credit Ratings are like that of Poland and ranked as being off average. In my experience, it is is still a growing nation, and although business is filtering through, it is not coming through in batches, and will go with the industry commentary here as being off average.
Risk Rating = 3
Like that of its former neighbour, Slovakia is better placed financially in tackling debts, and as the global recession hit the world back in 2008, Slovakia had been one of those countries to fare better in dealing with economic issues as and when they arose.
There is some growth and like the other two countries listed above, it has grown gradually since 2004, and its inception to EU membership.
Credit Ratings and are therefore are above average due to the strong export scene at present in terms of manufactured items, and in format of a legal activity in this country, there has been little in terms of investment into the UK, but that is changing and growing little by little.
Risk Rating = 2
In contrast to the above, Hungary on the other hand, had fared better in the late 80’s, early 90’s by relaxing communism borders, which led to an influx of foreign investment, but the recent recession has hit both private and public sectors accordingly, leaving the Hungarian economy pinching themselves at every move.
Legal activity in this country isn’t great, with half of claims not moving forward unless it is an established highly sought after brand, with good backing. Credit Ratings in this country are below average, and with that in mind it may be worthwhile to explore other avenues to credit check and sense check your Customers before going in for a deal. Essentially, an medium term deposit, as oppossed to a small term deposit would be beneficial to reduce your risk somewhat.
Risk Rating = 4
A late starter to join the EU, which was formally accepted in January 2007, means that the economy had been playing catch up. Coupled with the recession of 2008, has meant that the Romanian’s have been unable to cater for their finances sufficiently. An IMF bailout was introduced in 2010, leading to significant cuts across the nation. This led to substantial rallying in this region, and political overthrow of the government.
As a result, a couple of years on, the country are in the process of making baby steps onto recovery. Legal action has not been successful in this region either. There have been a couple of debts which although recognised officially by certain clauses placed by European Conventions, past gone had previously been thrown out by the Romanian Courts. Maybe that is just my experience, but that these things can take some time if you wish to issue legal proceedings in any Eastern European Country. With this in mind, and the Credit Rating which reflects this, it is important to bear in mind that sometimes a higher deposit would be enough to counteract any risk at a later stage, should things turn sour.
Risk Rating = 4
Please note that this Article is not designed to disturb or offend anyone, but are the views gathered from a purely economic and legal point of view in terms of the recovery of bad debt from these regions.