ED – this is part of bne IntelliNews annual series of OUTLOOK 2026 for the upcoming year, where we make a forward-looking assessment for all of the major Global Emerging Markets in Emerging Europe, Asia, Latin America, Africa and the Middle East, drawing on insightful reporting from our bureaus around the world. What is on the agenda? What are the prospects for economic growth and what problems lie in store in the coming year? A detailed report that covers, business, economics, finance, energy, politics and the major sectors of the most important markets. Economic growth across Southeast Europe is expected to remain moderate but resilient in 2026, supported by a gradual recovery in key trading partners. The four EU member states in the region will also benefit from the final year of disbursements from the Recovery and Resilience Facility, which should help sustain investment and consumption. That said, growth remains uneven. In the region’s largest economy, Romania, recovery is set to be delayed until 2027, constrained by fiscal consolidation after years of large deficits. Growth in the Western Balkans countries is stronger, but Serbia is expected to lag following a sharp slowdown in 2025. Downside risks remain significant. Weak external demand, tighter fiscal policy in several countries, and renewed geopolitical shocks could easily derail the region’s fragile momentum. If the economic picture is mixed, the political outlook is unequivocally fraught. Civil unrest risks across the broader Emerging Europe region have increased over the past year, according to analysis by Verisk Maplecroft, and Southeast Europe is no exception, with waves of protests in several countries ongoing at the end of 2025. Bulgaria enters 2026 amid entrenched political paralysis. After the collapse of Prime Minister Rosen Zhelyazkov’s minority government following mass protests over corruption and budget mismanagement, the country faces the prospect of an eighth election in five years. Fragmented parliaments, low public trust and the continued influence of entrenched private interests are likely to constrain policymaking regardless of the electoral outcome. Serbia also stands out as one of the most volatile cases. Triggered by the fatal collapse of a canopy at Novi Sad railway station in late 2024, protests have evolved into the largest anti-government movement in more than two decades. While President Aleksandar Vučić’s Serbian Progressive Party is still expected to retain power in 2026, public trust has eroded sharply, foreign investment has slumped, and the risk of “regional contagion” across the Western Balkans is rising. In Romania, the cancellation of the 2024 presidential election has left lasting scars. Despite an outward return to institutional normality, tensions within the ruling coalition, the politicisation of the intelligence services, and the growing influence of the far-right Alliance for the Union of Romanians (AUR) point to continued instability through 2026-27. A dysfunctional judiciary further amplifies both internal and external vulnerabilities. Slovenia, often viewed as a regional outlier, is not immune. Polls suggest a tight race between Prime Minister Robert Golob’s centre-left Freedom Movement and the centre-right Democratic Party in the 2026 general election, while a fatal incident involving a member of Slovenia’s Roma minority in 2025 led to protests and an increase in policing powers. The region’s political volatility is unfolding against a complex geopolitical backdrop. The war in Ukraine, uncertainty over future US foreign policy, and growing fragmentation within Europe over defence and fiscal priorities continue to shape Southeast Europe’s strategic environment. EU enlargement is formally regaining momentum, with the European Commission signalling that negotiations with Montenegro, Albania, Moldova and Ukraine could conclude within two years. However, meeting ambitious accession timelines will require far deeper reforms in competitiveness, labour markets and fiscal governance. Meanwhile, the EU’s influence in its neighbourhood is being challenged by rival powers, not only China and Russia, but also economic actors such as the United Arab Emirates (UAE). Beyond short-term growth and political cycles, Southeast Europe continues to face deep structural challenges. The Western Balkans are grappling with a labour market paradox: persistent unemployment above 10% alongside growing labour shortages, driven by emigration, demographic decline and low participation among women, youth and older workers. In sum, Southeast Europe in 2026 is likely to deliver steady but unspectacular economic growth. However, political instability, civil unrest and governance failures now pose the most significant risks to the region’s medium-term prospects, both for investors, and for the EU’s enlargement to its southeastern neighbourhood.