CEE Macro Weekly: Poland as the region’s growth engine

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TOP MACRO THEME(S):

• Some recap on current accounts and their outlook (p. 3) – 2q25 brought a further deterioration of current account balances in the region, although long-term prospects remain favourable.

WHAT ELSE CAUGHT OUR EYE:

• CEE: As usual in October, the IMF published the World Economic Outlook with forecasts including the CEE region. With regard to GDP growth, forecasts for Poland have not changed materially against the July update (which did not include forecasts for the rest of the CEE-4). GDP in 2025–26 will grow slightly above 3% (the fastest in Europe), and in the following years growth is expected to gradually slow to 2.6% in 2030 (0.1 pp lower than in the April projection). Czechia is expected to grow at around 2% throughout the forecast horizon, while forecast for Hungary includes its acceleration from 0.6% in 2025 to slightly above 2% in 2026 and a dynamic of 2.5% in 2030. The biggest downward revision concerned Romania. The IMF expects this economy to grow by only 1% in 2025 and 1.4% in 2026, and the forecast for next year was cut in half compared with the April edition. The worsening outlook is linked to the negative impact of ongoing fiscal consolidation. At the same time, its long-term effect will be beneficial, and the growth forecast for 2030 is 3.3%, just 0.2 pp lower than in April. In relation to inflation, the largest revisions (by 2.7 pp in 2025 and 3.6 pp in 2026) also concerned Romania, due in part to a higher VAT rate and other fiscal measures. The IMF expects price growth of 7.3% and 6.7% in 2025 and 2026, respectively. Beyond that, the lowest inflation path is forecast for Czechia; in Poland and Hungary, average inflation in 2026 will decline by 1 pp—to 2.8% and 3.5%, respectively - relative to 2025. Across the region, the IMF expects that over the long term (2030) price dynamics will be at the inflation target.
• CZE: A.Babiš said that he expects new government to be formed in December. He has insisted on the outgoing government to submit a revision of the budget bill with higher funds for motorway construction, threatening that important projects could be delayed due to the sluggishness of those in power. On the one hand, ANO has already announced that it will revise the 2026 budget, so any action by the current government in this area makes little sense. On the other hand, the Fiscal Council has criticized the current budget bill, particularly the allocations under the Transport Ministry. Specifically, the Council objected to classifying parts of infrastructure spending under the defence umbrella (which benefits from the EU’s escape clause) despite having little to do with defence - an approach viewed as an attempt to inflate the structural deficit. While the Council’s conclusions are not binding on the current government, they will increase political pressure to adjust the plan. K.Havlicek, most likely the next industry minister, informed that the government intends to remove the renewable energy surcharge, which will reduce energy prices for households by 15.1%, effective from 2026. The reduction is also to cover businesses.

THE WEEK AHEAD:

• The calendar includes a range of indicators of economic activity in Poland for September, which will allow for a first assessment of the economy’s performance in 3q25 (we expect GDP growth of 3.7%). In addition, attention will focus on the MNB meeting - the bank is under increasing pressure from the government to cut rates, but we do not expect any changes to monetary policy parameters.