CEE: Tomorrow to hopefully make up for yesterday

In the last CEE Macro Outlook released this year, we focus on 2026 prospects. On the one hand, the external environment should not be a major drag on the economic development in the region, as expectations for 2026 returned exactly where they were a year ago. On the other hand, policy uncertainty remains elevated, despite more clarity regarding tariffs as of August 2025. we expect slight improvement of economic conditions next year. CEE8 average growth is set to accelerate from 2.3% in 2025 to 2.7% in 2026. Market sentiment has been slowly improving in most CEE countries toward the end of the year, and consumer confidence has been rising. The only exception is Romania, where the impact of sizeable fiscal consolidation has kicked in.

Private consumption should remain one of the growth pillars, though private consumption growth is likely to slow down. We believe investment activity should be quite strong in 2026. Next year is the last year for drawing RRF funds. Countries will thus focus on utilizing as much as possible. In some CEE countries (Poland, Romania or Slovenia), roughly half of RRF grants are still not disbursed while in other countries the number is around a third.

Inflation should ease across the region in 2026. If oil and food prices remain close to current levels or decline further, they should have a disinflationary effect next year. As nominal wage growth has been slowing, inflation of services should ease as well. Monetary easing should be resumed in the course of 2026 in all CEE countries except for Czechia. In Czechia, 3.5% seems to be a terminal rate. In Poland and Romania, we should see monetary easing during the first half of 2026. In Poland we lowered the forecast to 3.5% and see the risks to the downside to our call. In Serbia, we expect monetary easing in the second half of the year. In Hungary, we believe that the first easing steps are likely in the second half of 2026, potentially toward the end of the year.

In the region, we expect long-term yields to fall throughout 2026, driven by declining inflation and resumed monetary easing in the region. Level-wise, the highest long-term yields are in Hungary and Romania (close to 7%) while the lowest are in Czechia (around 4%). As for the FX market, we expect relative stability of the EURCZK and EURPLN. More interesting developments have taken place in Hungary and Romania. The Hungarian forint has shown notable strength against the euro this year. In Romania, we think that 5.05-5.10 is broadly the new comfort range for the central bank.

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