Central and Eastern European (CEE) executives are setting their 2025 priorities focused on digitalization and cost optimization, in the context of persistent inflation and labor shortages – the region’s biggest challenges. These conclusions emerge from the “CxO Priorities” study, entitled “Fundamentals: The New Strategic Advantage – Navigating Trade Conflicts and Tech Disruptions”, conducted by Horváth, an international management consulting company present on the Romanian market since 2005.

The Horváth study notes that the CEE region is no longer just “recovering” from Western Europe, but is actively repositioning itself, through industrial relocation closer to target markets and strategic public investments that are starting to redefine its role in the European economic landscape. The findings of the Horváth study highlight several major trends shaping the corporate agenda for 2025:

Domestic expansion and strategic investments are reshaping the region’s economic model, although dependence on Germany and regional instability continue to weigh on the outlook.

Services companies are placing digital transformation as their number one strategic priority, while manufacturers are placing greater emphasis on optimizing costs and profit structure. This contrast indicates a general reorientation towards productivity, resilience and modernization of value chains in CEE.

Sector dynamics are divergent: manufacturers prioritize volume growth to fulfill contracts, while service firms rely on pricing strategies and value-added offerings to protect their margins.

CEE companies favor stability and controlled growth, focusing on consolidating existing positions, through products and services already validated in the market. Thus, 38% of executives see consolidation as their primary strategy, while diversification remains a secondary approach (16%), reflecting caution, risk aversion and a focus on core competencies.

Macroeconomic risks and AI investments

Inflation is the main macroeconomic risk for CEE companies, followed by the shortage of skilled personnel (43% in manufacturing and 49% in services) and interest rate volatility.

At the same time, the dependence of exports on Germany (20–30% of the region’s total) makes the economies of the Czech Republic, Slovakia and Hungary vulnerable to developments in the largest European market. Almost 40% of companies in the region are considering relocating production processes closer to key markets, to reduce dependence on Asia and limit risks generated by geopolitical tensions.

Artificial intelligence is seen as a strategic tool, with an average productivity increase estimated at 10-15% and the highest expectations of high productivity in areas such as IT and digitalization (20%), operations (19%) and sales (18%), over a three-year period. Although the use of AI is at an early stage in CEE (for administrative and operational processes), the trend is to expand to strategic functions.

Different degrees of optimism across industries

While the services sector is more optimistic about the growth of operating profit margins (EBIT), companies in the manufacturing sector continue to feel the pressure of high costs and supply chains. The most pessimistic industries regarding profitability growth are the oil and chemical industry, along with automotive manufacturing, while the highest optimism is found in the automotive and industrial automation industries, along with financial services and energy.

In terms of employment, most CEE companies, both in the manufacturing and services sectors, are counting on an expansion in 2025. Higher increases are expected in energy (+8%) and construction (+5%), and more modest in retail (+3%) or petrochemical industry (+2%), respectively transport and logistics (+1%). However, there is one area where employment is expected to stagnate (0%) – telecom, and in another a decrease (-2%) – automotive.

Although sustainability and innovation occupy secondary positions (9th and 10th places) among executives’ priorities, which indicates a pragmatic orientation towards operational resilience in the short term, sustainability remains on the agenda, even in a tense economic context: 73% of CEE companies maintain their “net zero” commitments or intend to achieve them earlier than the established deadline, compared to 82% globally.

“CEE companies are simultaneously facing inflationary pressures and talent shortages, but also major opportunities through digitalization and AI. The region has solid premises for resilient growth, supported by domestic demand and local investments. However, dependence on Germany and geopolitical uncertainties remain major risks, making diversification and strengthening regional value chains urgent. Those that transform these challenges into strategic agility and innovation will gain a strong competitive advantage in the years to come,” said Maria Boldor, Partner and Managing Director, Horváth Romania.

The detailed CEE report from Horváth’s study “CxO Priorities 2025” was conducted in May-June 2025, by interviewing 130 CEOs and CFOs from 8 countries in Central and Eastern Europe, covering industries such as energy, manufacturing, automotive, retail, technology and financial services. The report is part of a larger global analysis, with over 1,000 respondents from 33 countries.