Page 12 - SE Outlook Regions 2023

bargain-seekers.

Debt ratios continued to decrease in 2022 after the hikes in borrowing
and economic slumps during the pandemic. Debt had reached high
levels in Albania, Croatia and Montenegro in particular. However, with
the economic slowdown from late 2022, concerns have again been
raised about the sustainability of Montenegro’s debt burden, and the
threat to fiscal stability from the borrowing envisaged in 2023.

Input costs soar

The war and sanctions hit a variety of important sectors, including
energy, grain and metals.

With much of the gas supplied to Southeast Europe coming from
Russia, governments have been scrambling to diversify their sources,
looking to alternative suppliers such as Azerbaijan. This prompted a
speeding up of pipeline and other infrastructure projects.

Croatia’s strong performance so far has been down to a combination of
its relative resilience to the energy crisis, thanks to a large extent to its
construction of the offshore floating liquefied natural gas (FLNG)
terminal on the island of Krk, and partly to the continued post-Covid
rebound of its tourism sector. The FLNG terminal contributes to
Croatia’s energy independence, and the country has ambitions to
become an LNG hub for the region. Zagreb intends to double the
capacity of the terminal from 2.9bn cubic metres to 6.1 bcm.

Romania is also seeking to develop its offshore gas resources in the
Black Sea. BSOG has already started production in the Black Sea and
will add 1 bcm of gas to the country’s depleting production (under 10
bcm per year) and OMV Petrom/Romgaz should begin production in
2027.

Serbia has benefited from its good relations with Russia, securing a
new gas supply deal on favourable terms in spring 2021. Other
countries have fared less well; Gazprom cut off Bulgaria’s supplies in
April when former prime minister Kiril Petkov refused to pay in rubles,
while deliveries to Moldova were cut in autumn 2022, apparently for
political reasons, and there is considerable uncertainty about how much
the country will receive, or even whether.

Metals industries across Europe were hit by the higher energy prices,
with some announcing production cuts as prices started to rise
post-pandemic but before the invasion of Ukraine. Among those
affected in Southeast Europe are aluminium producers such as
Romania’s Alro, Slovakia’s Slovalco and Talum in Slovenia, as well as

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