Amsterdam, 4 February 2009 – A November 2008 survey, undertaken by the Economist Intelligence Unit on behalf of leading global credit insurer Atradius shows that despite concerns about the regional economy, companies do not expect a significant deterioration of their business in Central and Eastern Europe (CEE) in the next three years.

• Over the next 12 months only 40% of respondents expect a moderate impact and 30% a large or very large impact on their company’s operations from the economic downturn in CEE.
• While two-thirds of companies expect some difficulties in financing their CEE operations, only 14% expect this to result in a reduction in their operations in the region and only 15% are seeking to raise additional equity finance.
• 61% of respondents estimate that their annual revenue from trade and investment in the region would increase by more than 6% over the next three years and 90% expect annual profit growth from the region over that same period. This may partly reflect companies’ expectation that CEE economies will begin to rebound in 2010-11 after a difficult 2009 or that many respondents have not yet fully built the impact of the downturn into their plans.
• Firms already active in CEE are generally looking to diversify their presence in the region over the next three years. Although Poland will remain an important priority for companies, they are increasingly interested in the Balkans, which has lagged the Central European markets in reform and economic development but is set to narrow the gap in the coming years.

The report ‘Testing times – investing and trading in Central and Eastern Europe’ is the outcome of a survey of 300 senior executives from companies in Western Europe, the US and emerging markets which currently do business or plan to do business in CEE. This is the latest in a series of Atradius commissioned reports focused on informing businesses of the opportunities and risks of trade with emerging markets.

As CEE populations are expected to fall sharply in the coming decades, the region is at a disadvantage to Latin America and South-East Asia, where earlier surveys revealed that companies saw growing populations as a key advantage. The negative effects of falling populations in CEE for companies may however be counterbalanced to some extent by the increasing prosperity of these markets. More encouraging, 25% of respondents cite the significance of changing technologies as an opportunity: CEE retains considerable scope for economic development through technological catch-up with advanced economies.

Despite respondents overall positive assessment, a range of shortcomings in the regulatory environment were identified. Excessive or unclear bureaucracy is still a major hindrance. Other leading concerns for businesses include poor infrastructure, skills shortages, and rising wage costs. Corruption is a particular source of difficulty in Romania and Bulgaria. EU accession is generally recognised as having eased trading conditions within the new member states, although non-tariff barriers to trade with the new EU members remain an issue and trade with non-members has become more difficult. Further steps in European integration — membership in the Schengen zone of free internal borders and accession to the euro — are seen as highly important by respondents.

A copy of ‘Testing times – investing and trading in Central and Eastern Europe’ can be downloaded from the Publications section of the atradius.co.uk website.

About Atradius:
Atradius provides trade credit insurance, surety and collections services worldwide, and has a presence in 40 countries. Its products and services aim to help reduce its customers’ exposure to buyers who fail to pay for the products and services customers purchase. With total revenues of approximately EUR 1.8 billion and a 31% share of the global trade credit insurance market, its products protect companies throughout the world from payment risks associated with selling products and services on credit. With 160 offices, it has access to credit information on 52 million companies worldwide and makes more than 22,000 trade credit limit decisions daily.

Further information:
Atradius Corporate Communications and Marketing
Christine Gerryn
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www.atradius.com