IMF slashes growth forecasts

On the radar

• In Poland, March industrial production increased by 2.5% y/y, wages by 7.7% y/y and PPI declined by 1.1% y/y.
• Gross nominal wages rose by 14.9% y/y in February in Croatia, while unemployment in March was at 5.1%.
• Today at 10 am, Poland will publish retail sales data.

Economic developments

Yesterday, the IMF revised its global growth forecasts, which could further deteriorate due to the tariffs imposed by U.S. President Donald Trump. The global economy is now projected to grow by 2.8% in 2025, a reduction of 0.5pp from the January forecast. For the next year, the growth rate is expected to be 3%, a downward revision of 0.3pp. In the CEE region, most countries experienced downward revisions in their growth forecasts as well. The exception is Croatia, where GDP growth in 2025 is anticipated to be 3.1%, an increase of 0.2 percentage points from the October WEO edition. All other countries in the region saw their growth forecasts reduced. The most significant revisions since the October forecasting round are observed in Romania and Hungary, with reductions of 1.7 and 1.5pp, respectively. Their growth forecasts for this year are now 1.6% for Romania and 1.4% for Hungary. Other countries experienced downward revisions ranging from 0.3 percentage points in Poland to 0.8 percentage points in Slovenia. In most cases, the new IMF growth forecasts for 2025 align closely with our expectations, with the exception of Slovakia, where we maintain a slightly more optimistic outlook, differing by 0.5 percentage points.

Market movements

The dollar appreciated significantly yesterday, gaining 0.7% against the euro, and recouped some of its losses from the previous week. This movement followed President Trump's attempt to downplay his verbal attack on FED Chairman Powell. Additionally, Trump expressed optimism about achieving substantially lower tariffs with China once a trade deal is finalized. The Hungarian forint and Polish zloty both depreciated by approximately 0.5% against the euro, while the Czech koruna showed more resilience on global markets and lost only 0.2%. Meanwhile, Slovakia raised EUR 635 million in its regular monthly auction of four bonds. There was increased demand for longer maturities, likely due to global institutional investors repositioning from equities to fixed income assets and betting on lower interest rates amid sluggish economic outlook.

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