A mixed picture of healthy life duration in CEE

On the radar

• Romania’s central bank kept policy rate at 6.50% on Friday.

• Trade balance for June was published at EUR -2.3bn in Romania.

• At 10.30 AM CET Slovenia will release industrial output growth for June.

• There are no other releases scheduled for today.

Economic developments

We begin the week by looking at healthy life expectancy; an important indicator for long-term labor market trends. On average, individuals in the EU can expect to live approximately 63 years in good health, which means that they are able to perform daily activities without significant health-related limitations. Within the CEE region, Slovenia stands out with the highest healthy life expectancy at 66.6 years, placing it in joint fourth position within the EU. Moreover, Slovenia also recorded the largest improvement in the region over the past decade, with an increase of 8.1 years. Hungary also reported a relatively strong outcome, with an average of 63.6 years of healthy life. Poland aligns with the EU average, while the remaining CEE countries fall below this benchmark. A particularly interesting development is observed in Czechia, where healthy life expectancy declined by 1.3 years over the last ten years. At the lower end of the spectrum is Slovakia, with an average healthy life expectancy of just 57.5 years. The outlook is especially concerning for Slovak men, whose average stands at only 56.8 years—the third lowest in the EU.

Market developments

Romania’s central bank decided to keep interest rates unchanged at the August meeting at 6.5%. The central bank signaled a considerably higher inflation path in the near term amid the transitory impact of the expiry of the electricity price capping scheme in July and the increase in VAT rates and excise duties in August. CEE currencies strengthened last week, supported by a weaker dollar and several local factors. In many cases, inflation has been easing more slowly than expected, limiting the scope for further monetary easing in the region this year. Further, CEE government bond yields remained stable or edged slightly lower over the week. Fitch affirmed Czechia’s rating and outlook on Friday. This week, Romania will be scrutinized by Fitch ratings with decision scheduled on Friday after market closes. Polish government faces allegations of misusing the EU funds with Prime Minister Tusk pledging to zero tolerance for any abuse of funds.

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