Strong start of the year for tourism in CEE

Erste Bank Research Team Erste Bank

On the radar

Wages in Serbia rose by 15.3% y/y in nominal terms, 9.8% in real terms.
Tomorrow, Slovenia will publish retail sales growth for May.
The Czech Central Bank will decide on the key rate tomorrow.

Economic developments

As the peak holiday season approaches, it is time to take a look at the developments in the tourism industry. Since the pandemic, which brought extensive damage to the sector, we have seen a solid recovery. However, the recovery was partially dampened by increasing inflation and depleted households’ real income. From our region, tourism is essential mainly for Croatia, where it contributes about 20% to their gross domestic product. Pre-season data is looking strong with overnights being up 12% y/y in Jan-May period. Euro '24 may bring somewhat slower entry into the high-season, while growth rates heading into July-August would decelerate, due to full utilization of capacities. Overall, we expect yet another solid tourist season with overnights showing low to mid-single digit growth. In all other countries, except for Poland, the data for overnight stays also suggest strong start of the year. With the increasing real wages in most of the EU, we see potential for a strong tourist season in 2024.

Market developments

Markets are closely focused on the first round of French parliamentary elections taking place this weekend. Given that new fiscal rules have already been reinstated and France has been proposed by the Commission to be placed into the Excessive Deficit Procedure, there is significant debate about France’s ability to adhere to the rules and achieve fiscal consolidation. In the CEE FX market, the Czech koruna continued to recover from last week’s losses, while other CEE currencies exhibited some sideways movements.

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Erste Bank Research Team

Erste Bank

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