CEE: Global trade growth projected to slow

Erste Bank Research Team Erste Bank

On the radar

Inflation rate in Hungary increased to 4.4% in May from 4.2% in the previous month.

In Romania inflation rate in May arrived at 5.45%.

At noon CET, Serbia will release May’s inflation as well as central bank’s decision regarding key interest rate.

Economic developments

World Bank, in its latest Global Outlook (published on June 10), revised the global growth prospects down. World economy is expected to grow 2.3% this year and 2.4% in 2026. Euro area should expand at slower pace of 0.7% in 2025 and 0.8% next year, according to the World Bank’s projection. The forecasts for individual countries from the CEE region are not covered in this edition (apart from Poland expected to grow close to 3% in coming years), we thus turn our attention to global trade prospects. Global trade growth in goods and services is projected to slow sharply in 2025, to 1.8%, from 3.4% expected in 2024. The downward revision (in magnitude of 1.3 percentage point) reflects changes in trade policies in key economies and higher trade policy uncertainty. All in all, the dynamics of global trade growth is expected to remain well below its pre-pandemic average of 4.3% between 2010 and 2019.

Market movements

Today, Serbia’s central bank holds a rate setting meeting. It will be a close call between stability of rates and interest rate cut. If key policy rate remains unchanged at today’s meeting, we are quite sure that monetary easing will begin in July. Overall, we expect 75 basis points cut in Serbia this year. In Poland, the current government survived a confidence vote. The Hungarian forint and the Polish zloty have strengthened against the euro since the beginning of the week. In Hungary, May’s inflation at 4.4%, higher than expected, was main reason behind EURHUF moving toward 400. In Romania, central bank Governor Isarescu said that addressing fiscal risks is essential for economic stability. According to him credible fiscal policy and debt sustainability play crucial role in preserving investor confidence. Fitch Ratings sees deficit reduction and debt sustainability as key factors in rating evaluation.

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Erste Bank Research Team

Erste Bank

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