KBC Market Research Desk
KBC Bank
Problems stemming from weak demand in Europe are slowly starting to impact Central Europe. Our leading indicators for Central Europe (Flashes) are deteriorating from Warsaw through Prague to Budapest. The Czech and Hungarian Flashes are at their lowest levels for the last twelve months, while their Polish counterpart is at its 17‐ month lows.
The Czech Republic still looks best positioned in the Central European context. In recent months its Flash has fallen virtually exclusively because of the situation abroad – the deteriorating German Ifo index. The other components including future manufacturing tendency, new orders in car industry and PMI still looks rather healthy.
In Hungary and, in particular, Poland, all components of the Flash reports, including new orders and domestic PMI, are deteriorating. However, even in these economies the greatest bugbear is the rapid fall in the German business sentiment Ifo seen in the recent months. Without a turnaround in German business sentiment, it is difficult to remain optimistic on the Central Europe for the rest of the year.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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