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2. Demographic collapse
Six countries in the CEE region – Albania, Bulgaria, Croatia, Latvia, Moldova and Poland – are set to lose 40% or more of their populations by 2100, according to long-term forecasts from the UN. The combination of low birth rates and mass emigration has already affected all of the region except the majority Muslim republics of Central Asia and Azerbaijan.
“Demographic decline was already unprecedented over the last decade, on a scale never seen outside of war or famine. This will continue,” said Grieveson.
Population decline has added to the labour crisis that intensified in the years before the pandemic, as many of those who move abroad are of working age. The fall in the domestic workforce is only partly compensated for by inward migration. High demand for labour and upward wage pressure are set to resume once the pandemic subsides.
3. Automation
Faced with a growing labour shortage, pre-pandemic companies from Central and Eastern Europe outstripped those in other world regions in the pace of investments into industrial robots, even though Eurostat data shows that in absolute terms they still lag behind their peers from Western Europe. An OECD report identified workers in Slovakia as the most likely among the 32 OECD members to lose their jobs as automation technologies are adopted.
4. Climate change and resource competition
The climate crisis is already leading
to more extreme weather events: from droughts, flooding and wildfires, to the melting permafrost in Russa’s far north that threatens to cause entire cities to subside, to the severe dzuds in Mongolia, to rising sea levels. These are only expected to get worse during the first half of this century, despite global action to rein in the rise in global temperatures.
Climate change is exacerbating tensions over land and water, and new conflicts will emerge as resources become scarcer.
A row over a disputed water distribution centre appeared to be the trigger for clashes between local inhabitants and the armed forces of Kyrgyzstan and Tajikistan in April. In Southeast Europe – seen as a global warming hot spot – shrinking water resources and other problems associated with climate change will worsen existing border tensions.
5. Green transition
Wth the climate crisis comes opportunities as new sectors emerge and investments are made into areas such as renewable energy generation, electric vehicles (EVs) and raising energy efficiency.
Carbon intensity per unit of GDP is higher in CEE than Western Europe. “Research we [have] done shows this is an opportunity for CEE,” said Grieveson. The region’s EU members in particular will benefit from massive injections of funding for the green transition.
But it won’t be easy. There is strong resistance to the shift to renewable energy generation especially in coal- dependent Poland, Ukraine and much of the Western Balkans because of fears that communities based around coal mines and power plants will be
driving up prices and creating incentives for food producers and exporters in the region to raise production and increase productivity.
Pre-pandemic, Russia and Ukraine were competing for the title of the world’s
top grain exporter after several bumper harvests. In 2019, President Vladimir Putin said that Russia’s agricultural exports are expected to double, reaching $45bn in the next five years. This was interrupted by the pandemic, but is
part of a broader trend towards higher production that extends to other Black Sea region grain producers like Romania (the second biggest wheat exporter in the EU in 2019) and Kazakhstan.
Aside from grain, countries from the region can boast strengths in a diverse range of areas: Russia, Poland and Serbia are among the biggest producers of raspberries; Turkey produces almost three-quarters of the world’s hazelnuts, and Uzbekistan is the second-largest producer of carrots.
7. Digitisation
The pandemic achieved what techies had been dreaming of for years: the immediate shift online of retail and services. From the Western Balkans to
“The Western Balkan countries that aim to join the EU are still a long way behind eco¬nomically, and convergence will be slow"
economically devastated. Tensions have been reported between EU member countries, notably Romania, and
the European Commission as states’ need for road and traditional energy infrastructure clash with Brussels’ vision of a carbon-neutral Europe.
6. Food producers up their game
The world’s growing population combined with the threat to food production from climate change will put pressure on food supply, raising fears of scarcity. While populations are falling in CEE, globally demand for food will rise,
Uzbekistan there was a boom in online retail, new apps were developed to help people and governments cope with the pandemic and robots were deployed to enable social distancing.
Rather than this shift online dying away once the pandemic ends, the momentum it gave to the ICT sector is anticipated to continue.
At the same time, there is a culture shift towards remote working. As work from home has become normalised, the role of the office – for some companies at
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