Flash 3Q23 GDP growth in focus

Erste Bank Research Team Erste Bank

This week, flash estimates of 3Q23 GDP growth will be the main event, as several countries will publish data on Tuesday. Looking at the Economic Sentiment Indicator (ESI), which has been moving sideways over the last couple of months, suggests a lack of any stronger growth momentum. Apart from GDP data, October inflation will be published across the region, and we expect a further decline of headline figures. Trade and current account data will be released in Poland, Slovakia and Serbia. Last, but not least, Romania will publish industrial output growth in September as well as wage growth.

FX market developments

Over the week, the Czech koruna depreciated against the euro, as opposed to the Hungarian forint and the Polish zloty, which strengthened against the common currency. In the case of the Polish zloty, the central bank’s decision to keep the policy rate unchanged at 5.75% may have supported the EURPLN moving toward 4.42 at the end of the week, as the market consensus had pointed to a 25 basis point cut. The expected pause in monetary easing is a factor supporting a slightly stronger zloty. The decisions to keep the policy rates unchanged in Romania and Serbia did not have any major impact on the FX markets in these two countries.
This week, GDP data may be important for the monetary policy outlook, as the weaker than expected performance of the economy could be seen as an argument supporting monetary easing.

Bond market developments

CEE government bond yields stagnated last week, and even the NBP’s decision to keep rates unchanged had a very limited impact on POLGBs. Going forward, Hungarian bonds should continue to be supported by favorable inflation figures, which have dropped to single-digit territory one month earlier than initially expected. This may provide more confidence to the central bank in its current easing pace; we expect rates to be cut in 75bp steps on a monthly basis at least until February. This week, Croatia will offer retail investors one-year T-bills, which should be tax-exempt, targeting to raise EUR 440mn. Romania will reopen ROMGBs 2026 and 2038, Poland will sell a variety of T-bonds, and Hungary will offer T-bills on top of regular T-bond auctions.

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Erste Bank Research Team

Erste Bank

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