Optimism fueled by the end of the global pandemic was shaken last year by the shock of Russia’s invasion of Ukraine, which sparked Europe’s biggest war in 80 years. The immediate consequences were the rise in prices for energy and raw materials, as well as the acceleration of general inflation, which caused many concerns about the development of the economy. A year later, we see that the adaptation measures that European countries managed to take to mitigate economic problems have exceeded expectations. The predicted recession for the Eurozone was fortunately recently refuted by Eurostat, despite the energy crisis that has hit our continent harder than the rest of the world, with the risk of causing large-scale changes in the European economic structure, with a loss of competitiveness and attractiveness as a place of production.

Energy crisis, inflation

However, rising energy prices affect EU member states to varying degrees due to their individual energy policies: while production costs in France or Spain, for example, are rising relatively moderately, in other countries, such as Poland, the pressure is high. The reasons are related to the degree of dependence of each state on Russian oil and gas. In the long term, such differences may lead to structural changes in the European industrial landscape. A clear consequence is the acceleration of the energy transition, even if, in the short term, some governments have resorted to fossil fuel-based energy more than before the start of the war. Although initial assessments of the impact of the energy crisis were very pessimistic, the developments of the past year prove that the consequences will not be as severe as the reported deindustrialization of Europe.

Central and Eastern Europe in the spotlight. Investors are backing off

If we talk about our geographical space, it is clear that the war in Ukraine has put Central and Eastern Europe and, implicitly, Romania “in the spotlight”. Business leaders across the region are coping with the effects of the conflict, playing a huge role alongside politicians and other leaders. Today’s decisions will shape the future for decades to come, so it’s good to see moderate optimism and a determination to transform, to adjust businesses in response to the crisis, whether it’s the energy transition, the relocation of production or the reorganization of supply chains. supply.

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The article was signed by Dina Bumbeca, managing partner of PwC in Romania

Article supported by PwC Romania