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In response to recent releases of 4Q24 GDP data, we present an update of our growth and inflation forecasts as well as interest rate outlook. In most of the region, 4Q24 GDP estimates arrived either in line with expectations or surpassed them. Only in Romania and Serbia did 4Q24 growth surprise to the downside. Looking at the whole 2024 economic performance, Serbia and Poland experienced the strongest growth. On the other hand, Hungary and Romania underperformed. Regarding the outlook for 2025, we expect 2025 GDP growth to accelerate in all CEE countries except for Croatia and Slovakia. Unfortunately, the recovery is not going to be as strong as we expected at the end of 2024. We revised the full-year growth forecast downwards in several CEE countries.

Average inflation in 2024 was far lower compared to 2023. Inflation development at the end of 2024 showed some hiccups, however. At the beginning of 2025, the January number surprised to the upside in several CEE countries. We thus revise our 2025 inflation forecast upward in part of the region. The biggest upward revision of headline inflation took place in Hungary, where we see the 2025 average at 5.0%, compared to 4.1% previously. Inflation was revised upward and is expected to be higher by roughly 0.5 percentage points in Croatia and Poland compared to our expectations from the end of 2024.

While we still see monetary easing coming in the whole region in 2025, in most of the countries, it is likely to come later than we initially expected.

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