CEE cohesion funds await acceleration

Erste Bank Research Team Erste Bank

On the radar

Consumer prices in September 2026 increased by 4.1% y/y in Serbia, above expectations.
In Romania, trade deficit of 3137.8 million euro was registered.
Today, Romania will release inflation data in September at 8 AM CET.
Czechia will show details behind inflation increase to 2.5% y/y in September at 9 AM CET.

Economic developments

Today we look at the pace of absorption of EU cohesion funds in CEE as it is running visibly behind the previous programming period. So far, CEE7 countries have disbursed only around 30% of the 2021–27 allocation, compared with roughly 56% at the same stage of the 2014–20 framework. The key reason for such diversion in disbursement of regular EU funds is rollout of the Recovery and Resilience Facility (RRF) and 2026 being the last year to receive the RRF funds, which has competed for administrative capacity and investment projects with Cohesion Funds. CEE countries gave the priority to RRF funds, therefore. From a macroeconomic perspective, this creates potential upside for investment growth ahead as a substantial share of the available envelope still needs to be deployed as the programming period advances and Cohesion Funds are available until 2030 (T+3 rule). All in all, we would expect acceleration of absorption of Cohesion Funds until 2030 so that the gap closes by 2030.

Market movements

Fitch Ratings, which holds Hungary at BBB with a negative outlook, flagged the budget developments as the main risk in its latest note. Fitch Ratings expects general government deficit to widen to 7.3% of GDP in 2026 and to be at 5.8% in 2028 (vs. a 3.1% peer median), with debt rising from 74.6% of GDP to 78.1% by 2028 on election-related spending. In case of Poland, Fitch Ratings raised the general government deficit forecast for 2027 to 7.1% of GDP (from 6.7%) and sees 6.5% in 2028. Further in Poland, central banker Wnorowski said he considers interest rate hike in November as new inflation projection may reveal presence of second round effects. He is worried about de-anchoring of inflation expectations and weakness of Polich zloty. In Romania, Prime Minister designate Niculescu said that Romania can no longer afford to prolong this period of political uncertainty and that his preference is to have a political government because there is a greater responsibility. He plans to submit to Parliament the government program and the list of the cabinet of ministers on Thursday.

Download The Full CEE Macro Daily

Author

Erste Bank Research Team

Erste Bank

At Erste Group we greatly value transparency. Our Investor Relations team strives to provide comprehensive information with frequent updates to ensure that the details on these pages are always current.

AUD/USD remains depressed near 0.6950 after RBA minutes

AUD/USD attracts follow-through selling during Tuesday’s Asian session, looking to extend the overnight rejection slide from 0.7000, or a two-week top, following the release of RBA meeting Minutes. The US Dollar retains a bullish undertone near its highest level since April 2025 as energy-driven inflation risks keep December Fed rate hike bets firmly on the table. Adding to this, geopolitical risks further underpin the safe-haven USD.

USD/JPY extends retreat below 158.50 as intervention risks loom

USD/JPY is dropping below 158.50 in the Asian session on Tuesday, snapping a two-day winning streak and pulling back from an over two-week top touched the previous day, despite Japan's soft PPI inflation print. Bulls turn cautious amid speculation that authorities will step in to prop up the Japanese Yen, which, in turn, weighs on the pair.

Gold advances to $4,200 amid retreating USD; Fed hike bets to cap further gains

Gold builds on its modest intraday move up and hits a fresh daily high around the $4,200 neighborhood during the Asian session. The US Dollar retreats from its highest level since April 2025 amid some profit-taking, offering support to the commodity. However, the US Federal Reserve's hawkish stance and escalating Middle East conflicts could limit deeper losses for the safe-haven buck.

Cardano: Retail support wanes as ADA tests a make-or-break level

Cardano price is up nearly 2% at press time on Tuesday, holding above its 50-day Exponential Moving Average (EMA) at $0.2302 and a near-term rising support trendline at $0.2264. ADA is losing retail demand in the derivatives market as its futures Open Interest declines and funding rates flip negative.

Indian Rupee gains further on RBI’s fresh measures to lower US Dollar’s demand

The Indian Rupee extends the Monday’s advance against the US Dollar on Tuesday, driven by the announcement of fresh Reserve Bank of India’s US Dollar-related measures to shore up the domestic currency. In the opening session, the USD/INR pair tumbles 0.6% to near 95.00, the lowest level seen in over a month.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?