CEE: Recovery proceeds at different speeds

On the radar

• Today in the morning, manufacturing PMIs for October will be released.
• At noon, Serbia will publish 3Q26 GDP data.
• Czechia grew 1.6% y/y in 3Q26, while Hungary expanded 1.5% y/y in the third quarter.

Economic developments

Economic growth in the EU remained resilient in 3Q26. In annual terms growth accelerated slightly to 1.5% in the EU and 1.3% in the Eurozone. Notably, non-Eurozone EU economies continued to outperform – the calculated average annual growth should be approximately 2.6%. Germany's economy expanded by 1.2% y/y, suggesting a gradual recovery, while France recorded a marginal contraction of 0.1% y/y. In CEE, the first GDP estimates point to rather subdued economic activity. Czechia's economy expanded by 1.6% y/y in 3Q26, slightly below the 1.8% recorded in the previous quarter. Nevertheless, quarterly growth accelerated to 0.5% from 0.3%, supported primarily by household consumption and net exports, while gross capital formation weighed on growth, likely reflecting declining inventories. Hungary recorded growth of 1.5% y/y, down from 1.7% in 2Q26. Such development points to a continued fragile recovery in Hungary. Industry made the largest positive contribution to growth, supported by the gradual ramp-up of new export capacities, while services also continued to expand. Serbia's GDP figures have yet to be released, with growth forecast of 2.8% y/y, which would place the country ahead of Czechia and Hungary. Other CEE countries will publish 3Q26 GDP data in the middle of November.

Market movements

Poland is facing a major constitutional crisis following an extraordinary confrontation over control of the Constitutional Tribunal over the weekend. The dispute between President Karol Nawrocki and Prime Minister Donald Tusk has escalated from disagreements over judicial appointments into a direct institutional confrontation. The conflict centers on Nawrocki's refusal to administer the oaths of several judges elected by parliament. The president questions the legality of their appointments, while the government argues that he is obstructing a constitutionally valid selection process. President Nawrocki cut short his trip to Senegal and returned to Warsaw, where he personally entered the Tribunal building amid confrontations with judges. He accused the government of forcibly taking control of a constitutional institution and called for urgent consultations with political leaders. Meanwhile, Tusk defended the effort to restore the rule of law. EURPLN hits 4.41 while EURHUF is close to 365 and EURCZK is at 24.35. Local developments may weigh on the Polish zloty especially there is central bank meeting scheduled on Wednesday and S&P review of rating and outlook on Friday. In Czechia, central bank also holds interest rate decision this week and interest rate hike is broadly expected.

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