Inflation and labor deficit are the main risks for Central and Eastern European countries, to which are added the dependence of exports from the German market and imports on Asian countries, according to a specialized study.
Inflation and labor deficit are the main risks for ECE countries. Photo archive
Executives in Central and Eastern Europe (EEC) establish for 2025 priorities focused on digitization and cost optimization, in the context of persistent inflation and labor deficit – the greatest challenges of the region. These conclusions show from the study “CXO Priorities“, Entitled”Fundamentals: The New Strategic Advantage – Navigating Trades and Tech Disruptions”, Made by Horváth, an international management consulting company, present on the Romanian market since 2005.
Horváth study notes that the EEC region is no longer just “in recovery“Compared to western Europe, but actively repositioning, by industrial relocation closer to the target markets and strategic public investments that begin to redefine its role in the European Economic Landscape. The conclusions of the Horváth study highlights some major trends that outline the corporate agenda for 2025:
Internal expansion and strategic investments resort the economic model of the region, although addiction to Germany and regional instability continue to affect the prospects.
Services companies place the digital transformation as a strategic priority number one, while producers emphasize the optimization of costs and profit structure. This contrast indicates a general reorientation to productivity, resilience and modernization of value chains in the EEC.
The sectoral dynamics is divergent: the producers prioritize the increase of volumes to honor the contracts, while the service companies are based on price strategies and value added to protect their margins.
EEC companies favor controlled stability and growth, relying on strengthening existing positions, through products and services already validated on the market. Thus, 38% of the executives concern consolidation as the main strategy, while diversification remains a secondary approach (16%), reflecting caution, aversion to risks and focus on the basic skills.
Macroeconomic risks and investments in AI
Inflation is the main macroeconomic risk for CEE companies, followed by qualified personnel (43% in production and 49% in services) and the volatility of interest rates.
At the same time, the dependence of exports on Germany (20-30% of the total region) make the savings in the Czech Republic, Slovakia and Hungary vulnerable to the evolutions of the largest European market. Almost 40% of companies in the region consider relocating production processes closer to key markets, to reduce Asia dependence and limit the risks generated by geopolitical stresses.
Artificial intelligence is perceived as a strategic tool, with an average productivity increase to 10-15%and the highest high productivity expectations in areas such as IT and digitization (20%), operations (19%) and sales (18%), for three years. Although the use of AI is in an early stage in EEC (for administrative and operational processes), the tendency is to expand to strategic functions.
Different degrees of optimism between industries
While the service sector is more optimistic about increasing the margins of the operational profit (EBIT), the companies in the production sector continue to feel the pressure of the high costs and the supply chains. The most pessimistic industries on increasing profitability are oil and chemical, along with car production, while the highest optimism can be found in the automotive and industrial automation industry, along with financial and energy services.
Regarding the employment, most of the companies in the EEC, both in the production and services sector, rely on an expansion in 2025. Higher increases are expected in energy (+8%) and constructions (+5%), and more modest in retail (+3%) or the petrochemical industry (+2%), respectively transport (+1%). However, there is an area in which an employment stagnation (0%)-telecom is expected, and in another one decrease (-2%)-automotive.
Although sustainability and innovation occupy secondary positions (places 9 and 10) between the priorities of the executives, which indicates a pragmatic orientation towards the short-term operational resilience, the sustainability remains on the agenda, even in a tense economic context: 73% of the companies in the EEC maintain their “net zero global.
“The companies in the EECs simultaneously face inflationary pressures and lack of talents, but also with major opportunities through digitalization and AI. The region has solid premises for resilient, supported by internal demand and local investments. However, addiction to Germany and geopolitical uncertainties remain major risks, which urgently makes a regional diversification. Those who transform these challenges into strategic agility and innovation will gain a strong competitive advantage in the coming years ”said Maria Boldor, Partner and Managing Director, Horváth Romania.
The detailed report on the CEE region of the Horváth study “CXO Priorities 2025”, was carried out between May-June 2025, by interviewing 130 CEOS and CFOS from 8 countries in Central and Eastern Europe, covering industries such as energy, production, automotive, retail, technology and financial services. The report is part of a wider global analysis, with over 1,000 respondents from 33 countries.
