Central European Economic Outlook
Thu, Dec 18 2008, 11:26 GMT
by KBC Market Research Desk
• 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%.
