CEE Macro Weekly: A golden outlook ahead

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TOP MACRO THEME(S):

• A strong year behind us - an even better one ahead (p.3) – Production output rebounded strongly at year-end, with manufacturing posting solid growth and construction showing a modest recovery. The entire previous year in these sectors ultimately proved to be positive. Based on available data, we estimate GDP growth in 4q25 at around 3.8% y/y, implying full-year growth of approximately 3.5% y/y, in line with the baseline forecast.
  
  

WHAT ELSE CAUGHT OUR EYE:

• ROM: At its first meeting this year, the NBR kept interest rates unchanged, including the monetary policy rate at 6.50%. The decision was in line with expectations. As a result, interest rates have remained unchanged since August 2024. In the press release, it was stated that at the beginning of the year inflation will decline slightly, stemming from developments in some commodity prices, including agri-food, as well as from base effects. At the same time, the direct effects exerted by the expiry of the energy price cap and by the increases in VAT rates and excise duties in 3q25 will dissipate in the second half of this year. The central bank emphasized uncertainty related to the further course of fiscal consolidation as well as geopolitical tensions. In our view, the prospect of a marked decline in inflation in 3q26 may prompt the central bank to cut interest rates in 2q26.
• POL: President K.Nawrocki signed the 2026 budget act and subsequently referred it to the Constitutional Tribunal for ex post review. The President argued that withholding his signature would not have solved any of the problems and would instead have posed a risk to the stability and predictability of state affairs. This move is another indication of the difficult cohabitation between the President and the government. At the same time, it has no impact on the continuity of financing the state’s operations. In the previous two years, the former President, A.Duda, also made use of the option to refer the budget act to the Constitutional Tribunal for ex post review, which does not prevent it from entering into force.
• POL: Governor A.Glapiński announced that the NBP has taken a decision to increase the target level of gold reserves to 700 tonnes. The decision implies a departure from a percentage target in favour of a quantitative target, as rising gold prices inflate the share of the metal in reserves. Gold currently accounts for approximately 28% of foreign exchange reserves vs a target of 30%. Upon reaching 700 tonnes, Poland will advance from 12th to 10th place globally in terms of the size of central bank’s gold reserves.
• CZE: Schillerova (Ministry of Finance) stated that the limit of the state budget deficit in the draft for 2026 is to amount to approximately CZK 300 bn (3.5% of GDP). She announced that the draft budget would be presented to the government on 26 January, declaring the optimisation of expenditure. The focus will be on the meeting of the Hungarian central bank, which in our view is unlikely to result in any change in interest rates. At the beginning of the week, data on retail sales in Poland will be released, and we will also learn the registered unemployment rate at the year-end. Preliminary estimates of GDP growth in 4q25 in Czechia and Hungary, due at the end of the week, also look interesting.
  
  

THE WEEK AHEAD:

• The focus will be on the meeting of the Hungarian central bank, which in our view is unlikely to result in any change in interest rates. At the beginning of the week, data on retail sales in Poland will be released, and we will also learn the registered unemployment rate at the year-end. Preliminary estimates of GDP growth in 4q25 in Czechia and Hungary, due at the end of the week, also look interesting.