Central European Economic Outlook

Wed, Jan 21 2009, 09:26 GMT
by KBC Market Research Desk


• Czech Republic

Deteriorating domestic macro-outlook and gloomy regional perspectives weigh down on the koruna. The Czech currency broke through key levels around 27.40 EUR/CZK and remains vulnerable to further short term losses. Nevertheless the CNB is not bothered by weak domestic currency as Czech foreign debt is very low and denominated mostly in the korunas.

• Hungary

After the IMF head gave a relatively positive assessment of the developments by saying that they are ‘rather satisfied’. The next milestone will be the Funds’ regular assessment in February, which could concentrate on the 4th quarter budget surplus target (already met), the bank rescue package (accepted by the Parliament) and the disinflation process.

• Poland

The Polish Zloty stays under pressure despite the fact that the pre-ERM negotiations with European partners which were scheduled to take place in H1 2009 are set to go on as planned.

• Slovakia

We have revised down our 2009 GDP forecast to 3.0% from 3.9% on the back of growth downturn our main trading partners. Drop in inflation will be connected with lower deregulations, cheaper food and fuel prices. Further monetary easing of ECB is expected.