CEE: Recovery gathers pace in industry sector

On the radar

• Inflation in Serbia landed at 1.9% y/y in July, below market expectations.
• Romania’s industrial output declined by -5.2% y/y in June after -5.4% y/y contraction in May.
• Today, local inflation estimate will be released in Slovakia at 9 AM CET and detailed information on July’s inflation in Poland.
• Serbia’s central bank is holding a rate-setting meeting.
• Czechia will show current account position in June while Poland will publish trade data as well.
• Croatia will release producer prices growth in July.

Economic developments

While retail sector has lost momentum over the second quarter, situation in industry is quite different. Average industrial output growth shows a clear improvement in Poland, Czechia and Hungary as well as Slovenia and Serbia. Poland is standing out as the strongest performer as industry has accelerated from around 2.5% in 1Q26 to almost 5% in 2Q26. Czechia and Hungary also gain momentum. Croatia, meanwhile, records only modest positive growth. Further, Slovenia moves from a sizeable contraction in 1Q26 to solid positive growth in 2Q26, representing the most notable turnaround in the region. Serbia also improves, although the recovery is smaller compared to Slovenia. The picture is considerably weaker further south. Romania remains behind, with industrial output contracting sharply in both quarters, although the decline becomes more pronounced in 2Q26. Finally, Slovakia’s industry continues to post negative growth on average in both quarters, though it should be noticed that in June itself the growth turned positive (2.1% y/y).

Market movements

Today, Serbia’s central bank holds a rate setting meeting and we expect no change in policy rate at 5.75%/ Inflation in July has been subdued at 1.9% y/y/. Hungarian government approved an emergency to secure cooling-water levels at the Paks nuclear plant. In particular, the government has ordered the immediate construction of a rock riverbed sill between Paks and Dunaszentbenedek. The government estimates that a complete outage would cost the budget at least HUF 50 billion per month, compared with roughly HUF 6 billion for the announced interventions, although the drought and the risk of another fall in the Danube’s water level remain. Romania will shutdown of the 700-megawatt Unit 2 nuclear reactor at the Cernavoda nuclear plant, as low water level in the Danube river prevent proper cooling of the equipment according to announcement of the Romanian Energy Ministry. Bond market performance remains mixed in the region while CEE currencies show signs of strengthening against the euro at the end of the week.

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