CEE Macro Weekly: Divergent forecasts

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TOP MACRO THEME(S):

• Monetary policy review (p.3) – We assess that the balance of risks for monetary policy in the region has recently tilted slightly to the upside. We expect rate-cut cycles to continue or resume in 26q1 in Poland and Hungary, with the Romanian central bank joining in 2q26.

WHAT ELSE CAUGHT OUR EYE:

• CEE: European Commission updated its forecasts for the EU countries. The Commission projects that all economies in the region, except for Czechia, will see an acceleration of GDP growth next year. In Czechia, growth is expected to slow slightly below 2%, to 1.9% from 2.4% in 2025, and to accelerate to 2.4% in 2027. Consumption will remain the main driver of growth, to which investment will also contribute. The contribution of net exports to GDP growth will be negative and will only become neutral in 2027. The forecast for Hungary indicates a clear acceleration of growth, to 2.3% (yet from a low rate of 0.4% in 2025), followed by a slowdown to 2.1% in 2027. In 2026, the strongest growth will come from consumption, but investment will finally record a solid increase of 2.2% after three years of decline. In 2027, gross fixed capital formation is expected to grow even faster than consumption, driven by public projects, a revival in building construction and improved business sentiment. Net exports will have a negative (though gradually approaching neutral) contribution to growth dynamics, mainly due to strong imports. Export growth will also rebound and is expected to hover around 4% in 2026–2027, supported by the opening of new assembly facilities in the automotive sector (e.g., the BYD plant is expected to start production in 2q26). Poland will remain the regional growth leader within the forecast horizon, with economic growth accelerating from 3.2% in 2025 to 3.5% in 2026 and slowing down to 2.8% in 2027. Consumption will decelerate, although its growth will remain solid, while in 2026 investment will accelerate to as much as 7.4%, which will be the highest rate in the region due to EU-funded projects. The contribution of net exports will remain negative but will move closer to neutral. Growth prospects for Romania are moderate, with growth in 2025 and 2026 hovering around 1%, and accelerating to 2.1% only in 2027. Fiscal consolidation will dampen private consumption, which is projected to decline in 2026 by 0.8% — for the first time since the pandemic. As consolidation effects fade, consumption will accelerate to 2.4%. Despite the weakest short-term growth outlook in the region, Romania stands out with a positive contribution from net exports in 2026, which will be similar in size to the contribution from domestic demand, driven primarily by investment. Fixed capital formation will remain strong as RRF-funded spending accelerates. In terms of fiscal projections Poland will have the highest fiscal deficit in the EU, overtaking Romania, whose deficit will decline sharply thanks to the fiscal consolidation that has been carried out. In Poland, the deficit is set to rise to 6.8% of GDP in 2025 and then decrease to 6.3% and 6.1% of GDP in 2026-27, which represents an upward revision of 0.4 pp for 2025 and 0.2 pp for 2026 against the previous forecast.

THE WEEK AHEAD:

• The week will be marked by data on economic activity in Poland, which will to assess the state of the economy at the beginning of 4q25. Worth attention will be the revised GDP estimate for 3q25 in Czechia. The CNB board was treating the very strong first estimate (2.7% y/y) with a degree of caution, so maybe there is some potential for a downward revision.