COVID-19 and SEE: the region’s response to the crisis

By Liliya Goranova, Head of SeeNews Insights

Traditionally, the Landscape section of SEE TOP 100 provides a snapshot on several macroeconomic indicators for each of the SEE markets, including gross domestic product (GDP) and gross value added (GVA) figures, historical data on foreign direct investments (FDIs) and ranking of the top 10 companies in the respective market. You can still find these in an appendix. However, the 13th edition of SEE TOP 100 comes in a year that can hardly be described as “traditional” and that is why our Landscape section provides a different perspective this time around – one that looks into the SEE economies’ performance and prospects for recovery amid the COVID-19 pandemic.

This research aims to examine the regional developments in Southeast Europe (SEE) during the COVID-19 pandemic in a global context and to assess the probability of economic recovery for each country. It also provides an overview of the potentially best, medium and worst performing economies based on a set of indicators, plus a comprehensive analysis of further factors affecting the performance of the economies stricken by the crisis.

In June, when SeeNews published the first issue of its report “COVID-19 and SEE: the initial prospects to fight off the crisis”, seven of the SEE economies were expected to be able to recover their GDP to pre-pandemic levels in 2021. As of mid-October, however, Serbia is the only country whose economy should recover next year while most other countries will see their GDP return to pre-pandemic levels in 2022 or even in 2024 in the case of Montenegro.

The region’s favourable position in terms of containment of the virus has also become shaky. In the middle of October, during the preparation of the latest SEE TOP 100 issue, SEE on average had 1,751 active COVID-19 cases per one million people against 1,094 cases globally. The unfavourable upward trend is in stark contrast with the first half of the year when most countries in SEE acted decisively and swiftly at the onset of the pandemic, supressing infection rates across the region far below global levels. Another aggravating factor is SEE’s dependency on sectors which we are calling “losing sectors”– these are the industries we expect to bear the brunt of the economic crisis brought about by COVID-19 . There are, of course, sectors that will emerge as “winners” but most of them currently represent too small a share of SEE economies’ GVA to make a difference and counterbalance the negative effects in a meaningful way. We have included only two of these winning sectors in our analysis due to their relatively high shares in the analysed 11 economies. This disproportion between losing and winning makes the SEE region especially susceptible to sectoral risks and some economies are inevitably facing employment shocks as well as fiscal risks stemming from diminishing taxes.

Yet, not all is gloom and doom. As governments across the world started imposing lockdowns, it was clear that SEE has several advantages in the face of the new economic crisis. While both the IMF and the World Bank recently rung the alarm on a rising global debt-to-GDP ratio, most countries in the region entered this tumultuous period with low public debt levels. This in turn gave local governments the opportunity to implement comprehensive economic measures to support businesses and individuals without putting too much pressure on sovereign debts. Nine out of the 11 economies we analysed are high performers in terms of economic measures, while two fall in the “medium” performance tier. Notably, all governments introduced sector-specific support measures which should somewhat alleviate the aforementioned sectoral risk. The decrease in economic activity across the region has also been less pronounced compared with other parts of Europe, as evident by the latest data on industrial output. Five of the SEE markets reported a monthly increase in industrial output in August, with four of them even reporting figures above the EU average.

Performance on other indicators in our methodology, such as labour market prospects and exposure to diminishing tax revenues, remains mixed and highly dependent on the progress of the pandemic’s second wave. However, as already noted, unpredictability is in the very nature of this particular crisis. That is why we do not claim for this assessment to be final but merely a snapshot of each country’s current prospects.

The following profiles represent a snapshot of each of the countries’ strongest and weakest traits in the coronavirus crisis as of October 2020.


To ensure raw data reliability and compatibility, we have used the official websites and publications by Eurostat, the national statistical offices and the central banks of the analysed countries, as well as international financial institutions and sector organisations. COVID-19 infection rates data is taken from the real-time reference website Worldometer. In the process of identification of sectoral risk, we have chosen the five most vulnerable to demand and supply shocks sections of economic activities in the broad structure of NACE Rev. 2, the statistical classification of economic activities in the European Community. The same classification and criteria apply to the two GVA boosters, which we have identified as most probable beneficiaries from the pandemic. There are other economic activities that are likely to emerge as winners in the current crisis, such as e-commerce, medical devices manufacturing and home entertainment, but they remain out of the scope of our statistical analysis due to lack of reliable and comparable data and their negligible share in the respective countries’ GVA. The analysis and assessment of the raw data is carried out through own calculations and boundaries of the categories. In the assessment process, the country performance for each of the indicators, which can consist of one or more sub-indicators, is rated as high, medium or low. Performance in numeric sub-indicators is calculated depending on the deviation from the average of all SEE countries or from a EU benchmark, where applicable. FDI risk exposure is analysed as an indicator for each country in terms of geographical concentration of the source destinations, without assigning a high, medium or low grade. Performance in qualitative sub-indicators is determined depending on whether or not the respective or supportive measure is available in the country and to what extent (direct proportion). When all sub-indicators of a given indicator are rated as high, medium or low, points are assigned as follows: 2 for high, 1 for medium and 0 for low performance. The indicator adopts a grade, depending on the deviation from the average aggregate value. No single overall grade of a country’s recovery prospects is assigned.

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