CEE: Global trends shaping 2025 growth outlook

On the radar

• January’s trade balance in Romania ended in a deficit of €2.7 billion.

• Industrial output growth in Czechia in January was -0.6% y/y.

• At noon CET, Serbia will release February’s inflation rate.

• We expect Polish central bank to keep policy rate unchanged at 5.75%

• Hungarian central bank will release minutes from the central bank meeting.

Economic developments

In recent CEE Outlook Global trends shaping 2025 growth outlook we discuss influence of global developments on the economic outlook in the region. Tariffs are expected to have a negative effect. On the other hand, plan to ReArm Europe (activating escape clause and introducing the new instrument worth EUR 150 billion) in combination with prospects of German huge infrastructure spending in the coming years should provide a fiscal impulse and boost the growth. Reaching the peace between Ukraine and Russia would be another growth positive factor for CEE. All in all, we expect 2025 GDP growth to accelerate in all CEE countries except for Croatia and Slovakia. In Croatia, we expect a slight cooling off, while Slovakia should sustain a similar pace of growth. Average growth in the region should be 0.6 percentage points higher in 2025 (2.6% vs. 2.0% in 2024). The acceleration of growth should be driven mainly by stronger growth of investment. Inflation has been elevated lately. While we still see monetary easing coming to the whole region in 2025, in most countries, it is likely to come later than we initially expected. The size of monetary easing will be smaller as well.

Market developments

Peace talks between US and Ukrainian officials in Saudi Arabia ended with Ukraine accepting a 30-day ceasefire proposal from the United States. The onus is now on Russia to take steps to end the war. The US will also restore intelligence sharing and security assistance to Ukraine. Locally, Polish central bank will announce an interest rate decision, and we expect no change in policy rate. New inflation and growth projection will be published as well and hopefully it will shed more light regarding monetary easing in Poland. We still see probability of rates cut in the second half of the year, after presidential elections. Hungarian central bank will release minutes from the central bank meeting. Prior to that, Governor Varga will speak. On Tuesday, inflation rate in February surprisingly increased to 5.6% y/y. Finally, Romania’s constitutional court upheld a decision banning presidential front-runner Calin Georgescu from May’s election.

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