IMF slashes growth forecasts

Erste Bank Research Team Erste Bank

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.

Download The Full CEE Macro Daily

Author

Erste Bank Research Team

Erste Bank

At Erste Group we greatly value transparency. Our Investor Relations team strives to provide comprehensive information with frequent updates to ensure that the details on these pages are always current.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.