CEE: Strengthening of the business sentiment in Germany
On the radar
- September’s producer prices in Slovakia will be released at 9 AM CET.
- At 10.30 AM CET, Slovenia will publish retail sales growth in September.
Economic developments
Today we summarize the latest sentiment trends in Germany. On Monday, the ifo Business Climate Index rose to 88.4 in October, aligning with the flash PMI release for Germany published last Friday, which also showed improvement. The Composite PMI Index climbed to 53.8, marking a 29-month high. This growth was primarily driven by momentum in the services sector, which continues to expand. The ifo survey confirms this trend, reporting a significant improvement in the business climate within the service sector. The overall strengthening in sentiment is largely attributed to improved expectations for the coming months, as companies remain hopeful that the economy will gain traction in the next year—supported by factors such as tariff stability, fiscal expansion, and infrastructure projects. Regarding the manufacturing sector, output has increased for the eighth consecutive month, and new orders have picked up, according to the October PMI release. Unexpectedly good start to the final quarter of 2025 sets a solid ground for stronger economic development of the region next year.
Market movements
In Czechia, President Pavel asked Babis, the leader of ANO to lead the talks on a new government that will seek to approve the 2026 budget by the end of this year to avoid a provisional budget. In Romania, the budget gap at the end of September was at 5.4% of GDP. Romania placed 2029 and 2033 bonds that were priced to yield 7.1% and 7.11% respectively. Slovakia will offer EUR syndicated bond with 12Y maturity. In Poland the central banker Kotecki advocates for pause in the monetary easing cycle until 2026 to assess the impact of interest rate cuts delivered so far, throughout 2025. The CEE currencies gained against the euro at the beginning of the week, while long-term yields have declined.
Author
Erste Bank Research Team
Erste Bank
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