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Central European Economic Outlook

Thu, Dec 18 2008, 11:26 GMT
by KBC Market Research Desk

KBC Bank


• Czech Republic

The Czech economy slows down as the foreign demand freezes. Inflation falls due to cheap oil and food prices. Another rate cut is in the pipeline. Growing unemployment increases uncertainty and limits the consumer confidence and consumption. Cheaper oil will improve the trade balance rapidly.

• Hungary

MNB surprised markets twice as it reduced its base rate by double 50 bps cuts in just fourteen days. Nevertheless real yields are still very wide on the Hungarian market as inflation is expected to fall to between 2% and 3% over the next 12- months

• Poland

Polish macro outlook deteriorates as euro-zone falls into recession. We bet on significant slow down next year that should take place mainly due to lower export activity. Nevertheless the domestic consumption may be resilient as higher unemployment should be more than offset by fall in inflation and growth in real wages.

• Slovakia

The economy still grows at a strong pace, but the outlook has deteriorated on the back of worsening external environment. We revised down our 2009 GDP forecast to 3.9% from 5.5%. The NBS followed the ECB with a 75 bps cut bringing the key rate at 2.5%.

Published on  Thu, Dec 18 2008, 11:29 GMT


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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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