Central European Economic Outlook
Tue, Nov 4 2008, 11:37 GMT
by KBC Market Research Desk
• Czech Republic
The Czech economy is starting to slow down significantly, and this trend will also persist in the months to come. Even so, after the significant slowdown later this year and in the first half of next year, towards the end 2009, we expect a moderate acceleration of economic growth. An extraordinary stimulus, which might offset some of the drop in output of existing enterprises, should be the launch of Hyundai’s new factory.
• Hungary
The IMF announced an €20bn rescue package for Hungary including €6.5bn support from the EU and €1bn from the World Bank in an effort to restore the confidence in the currency. The IMF package suggests that international institutions do not want Hungary to experience a fully market driven correction, but some kind of a managed recession.
• Poland
GDP growth estimates are in the process of being revised sharply to the downside as export perspectives have weakened dramatically along with the deterioration in economic sentiment in the EMU. Our baseline scenario still assumes a decent 3.5% y/y headline GDP growth in 2009, fuelled mainly by domestic consumption.
• Slovakia
The NBS cut rates at its October meeting. The base repo rate, as part of the coordinated effort with ECB’s move, went down by 50 bps to 3.75%. However, overnight rates were changed asymmetrically: while the refinancing rate was cut by 50 bps to 4.75%, the sterilisation rate was raised by 50 bps to 2.75%.
