CEE: World bank updates their economic forecasts

Erste Bank Research Team Erste Bank

On the radar

Producer prices in Czechia grew by 1.5% y/y in May.
Industrial orders declined by -6.6% y/y in Slovakia.
Core inflation went marginally up to 3.1% y/y in May in Poland.
Today, Hungary releases average wage growth in April (8.30 AM CET).
Serbia will publish current account data for April at noon CET.

Economic developments

Today, we report on the World Bank’s latest economic forecasts and the outlook presented in its most recent Global Economic Prospects report. Overall, global growth is projected to slow to 2.5% in 2026, which would mark the weakest pace of expansion since the COVID-19 pandemic. This reflects softer prospects for economies dependent on energy imports, as well as for those directly affected by the conflict in the Middle East. Activity is expected to strengthen gradually in 2027–28. Reduced commodity flows from the Gulf region have pushed energy prices sharply higher, adding to cost pressures and contributing to elevated consumer inflation. Against this backdrop of intensifying inflationary pressures, global monetary conditions are expected to tighten. The World Bank forecasts Eurozone growth at 0.8% in 2026, followed by an acceleration to 1.3% in 2027. The United States economy is expected to expand by 2.2% in 2026 and 2.1% in 2027. We remain somewhat more cautious regarding the growth outlook for both the Eurozone and the United States. Turning to selected countries in the region, the World Bank expects Poland and Serbia to grow at or close to 3% in 2026. In the case of Poland, we maintain a more optimistic view, forecasting growth of 3.6% in 2026. For Romania, the World Bank expects stagnation, whereas our baseline scenario assumes a mild recession this year.

Market movements

Multiple ECB Governing Council members warned that the US-Iran peace deal will not quickly remove euro-area inflation pressures, with energy disruption and pipeline inflation still feeding through. In the region we are waiting for Czechia’s central bank decision (due Thursday) as rate hike is expected even in face of peace deal. The Czech koruna strengthened toward 24.10 against euro on improving risk sentiment, stronger domestic data and rising market rates ahead of the CNB decision. The Hungarian forint is also the strongest in many years due to the US-Iran peace news, with EURHUF going below 350 and EURPLN dropped to 4.23. Yields have declined across the region. Further, the Tisza-led parliament is voting on an anti-corruption and rule-of-law package designed to unlock blocked EU funds therefore delivering what has been promised in that area. In Romania, prime minister-designate Vestea pushed ahead with attempts to find political support for his government, defying an ultimatum from his Liberal Party to drop the bid.

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Erste Bank Research Team

Erste Bank

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