Central Europe will maintain its impressive five percent growth rates that far outpace western Europe’s economic performance only if it completes free market reforms, warns the Central Europe Top 500 2008, a new ranking and report authored by Deloitte Touche Tohmatsu on the region’s 500 largest companies.

The Deloitte Central Europe Top 500 charts companies’ progress in the region, which stretches from the Adriatic to the Baltic and the Black seas and contains a raft of countries, all of which have either already joined the European Union or are at various stages of the EU accession process.

The Deloitte report advises that reform policies and, above all, privatization, must be pursued by governments in Central Europe. Only then will the region be able to catch up the countries in western Europe.

Deloitte also warns, quoting exclusive interviews with CEOs from companies throughout the region, that Central Europe will only continue to attract foreign direct investment if urgent changes in education systems are made that will bring new skills to the workplace.

The recommendation comes as rising labor and other costs mean that Central Europe can no longer market itself to foreign investors, solely, as a low cost region. The CE Top 500 ranking comes as a young people born after 1989—a full generation free of communist influence—join the workforce, marking an exciting turning point for the region.

The CE Top 500 ranking charts the fortunes of the largest 500 companies in the region by revenue, profits, employment and capitalization. The ranking shows little change from the previous year with PKN Orlen, Poland’s oil refiner and petroleum distributor, still at the top of the list with other energy companies including MOL of Hungary and CEZ of the Czech Republic close by. The other top slots are filled by automobile manufacturers led by the Volkswagen owned Skoda from the Czech Republic followed by Audi in Hungary and Volkswagen’s own subsidiary in Slovakia. Telekomunikacja Polska, the telecommunications provider from Poland is the only non-energy related, non-auto company in the region’s top 10.

The biggest foreign investors by revenue are Volkswagen, the auto manufacturer, Arcelor Mittal, the multinational steel group, and Metro, the retailer. CEZ, the Czech energy giant leads the market capitalization ranking followed by two banks in Poland, Pekao SA, and PKO BP.

The CE Top 500 also contains charts showing the largest companies in Banking (CSOB, Czech Republic), Insurance (PZU, Poland), Construction (Skanska CS, Czech Republic), Energy and Resources (PKN Orlen, Poland, Manufacturing (Skoda, Czech Republic), Pharmaceuticals (Chinon Zrt/Sanofi Aventis, Hungary), and Technology, Media & Telecommunications (Telekomunikacja Polska SA, Poland).

Tags: Deloitte