Employment in CEE grew again last year

On the radar

• January’s inflation in Czechia dropped to 2.3% y/y while in Slovakia it went down to 3.9% y/y.

• Today at 10 AM CET Poland will publish January’s headline inflation.

• In Slovenia, real wage growth in December will be released.

Economic developments

In light of the recent GDP data releases, we turn our attention to the employment statistics released by Eurostat. Employment, encompassing both salaried employees and self-employed individuals engaged in productive activities, paints a comprehensive picture of economic health. Unfortunately, only Poland, Slovakia, and Slovenia have disclosed figures for the final quarter of the previous year. However, data from the first three quarters across other countries still provide a satisfactory overview. In 2023, all CEE countries, with the exception of Romania, reported an average increase in employment. Interestingly, despite Romania's employment decrease throughout the three quarters of 2023, it posted the second strongest GDP growth in the CEE region, surpassed only by Serbia. The reasoning for this phenomenon is most probably a methodological issue, as the local statistical office reports an increase in employment. Slovakia and Hungary reported modest employment increases; while Hungary's annual growth remained relatively low in the first three quarters, a 0.8% decline in Slovak employment in the third quarter impacted its annual average. Overall, we anticipate continued employment growth in the coming year, although long-term growth may suffer by unfavorable demographic trends.

Market movements

The CEE currencies have weakened against the euro since the beginning of the week while bond market has been showing mixed performance. In Czechia, Finance Minister Stanjura said that Czechia’s assessment of readiness to join Eurozone should be postponed to first quarter of 2025 when it will be known if Czechia meets the criteria of Euro adoption for 2024. Today, Governor of Romanian central bank holds a press conference and will present the new inflation forecast for this and next year. In Poland, the MPC member indicated that further interest rate cuts are an option in the second half of the year only if inflation remains subdued after Governor Glapinski suggested that stability of rates in 2024 is the most likely scenario.

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