CEE Macro Weekly: Small tweaks to the CEE macro scenario (as for now)

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TOP MACRO THEME(S):

• Economy is holding out for spring (p.3) – Data published so far indicate that GDP growth in 1q26 most likely slowed relative to 2h25. We would, however, expect the lost output to be recovered gradually over subsequent quarters.

WHAT ELSE CAUGHT OUR EYE:

• CEE: Poland remains the most attractive investment destination for German enterprises in CEE - according to a KPMG survey. In 2026, as many as 56% of companies planning new investments indicate Poland as the primary destination for capital allocation. Ukraine ranks second (43% of responses), while Romania and Czechia are tied for third place, each with 35%. The key factors supporting investment in the region are primarily access to sales markets and still relatively low labour costs. The region’s principal vulnerabilities remain political and military risks, alongside corruption - the latter cited by 47% of respondents.
• POL: Prime Minister D.Tusk confirmed that there will be no obstacles to transferring EU funds to Poland under the SAFE programme. Earlier, the government plenipotentiary indicated that Poland is expected to receive an advance of 15% of the requested funds as early as the beginning of April, amounting to approximately EUR 6.5bn. These funds, together with resources from the RRF, will support domestic investment already this year. In result solid economic growth in Poland should not be at risk despite emerging global threats. Assuming that the full loan amount of EUR 43.7bn flows to Poland under SAFE and that 80-90% of these funds are channelled to domestic enterprises, our estimates suggest that this transfer could increase domestic output by approximately 4.5-5.3% of GDP. The loan does not create fully new demand - in its absence, investment would still take place, but on a smaller scale due to budget constraints. These funds will therefore provide a growth impulse to the Polish industrial sector.
• CEE: The first consensus forecasts for CEE countries, published by Consensus Economics, suggest that the impact of the conflict in the Middle East is viewed as clearly negative for the economic outlook. GDP growth projections have been revised slightly downward, while inflation expectations have been adjusted upward. However, should the conflict persist, a more pronounced deterioration in the macroeconomic outlook is likely.
• CZE: The CNB kept interest rates unchanged at 3.50%. Inflation declined to 1.4% y/y in February, marking the lowest level in a decade, and is projected to remain below 2% in 2026 before moving closer to target in 2027. The Bank emphasises the need to maintain a relatively restrictive monetary policy amid a strong labour market, solid wage growth, rising consumption, and persistent price pressures in services and the real estate market. The conflict in the Middle East remains an additional risk factor. We assume that the CNB will keep interest rates unchanged this year.

THE WEEK AHEAD:

• The coming week is expected to be relatively calm, at least in terms of scheduled data releases. Later today Moody’s will update Poland’s foreign currency rating (A2) - we do not anticipate any changes. On Monday, February data on retail sales and M3 money supply will be released. On Tuesday, Hungary’s MNB will announce its decision, with interest rates expected to remain unchanged.