This paper investigates the complex interplay between Gross Domestic Product (GDP) fluctuations and unemployment rates, with a focus on enhancing economic stability and growth in Central and Eastern Europe. Through panel data analysis spanning from 2002 to 2021 across six transitional economies – Bulgaria, the Czech Republic, Croatia, Hungary, Poland, and Romania – this research delves into the impacts of external shocks and the informal economy on the established relationship between GDP and unemployment. Previous studies have largely confirmed the inverse relationship dictated by Okun’s law; however, the impact of external economic disturbances like financial crises and pandemics, along with internal dynamics such as the informal economy, necessitates a targeted regional study in these transitional economies. The econometric analysis, leveraging Ordinary Least Squares (OLS), Fixed Effects, and GMM models within the R programming environment, validates the anticipated negative correlation between unemployment rates and GDP per capita. Ultimately, this paper advocates for a more customised approach to economic policy in the European Union’s diverse economic landscape, promoting enhanced stability and growth.