Croatia leads CEE industry rebound

Erste Bank Research Team Erste Bank

On the radar

In Romania industry contracted by -6.1% y/y in July.
Inflation in Slovakia landed at 3.1% y/y, in Poland it was confirmed at 3.4% and in Croatia at 4.2% y/y in August.
Today, Hungary releases wage growth at 8.30 AM CET, while Czechia producer prices at 9 AM CET.
Poland will show core inflation development.

Economic developments

After retail sales, we report on the performance of industry in a similar manner, as Romania published industrial output growth yesterday, completing July’s data for the region. In general, industrial production strengthened in most CEE countries at the beginning of the second half of 2026, with July showing faster year-on-year growth than the 1H26 average in most countries. The improvement was particularly pronounced in Croatia, where output growth accelerated from less than 1% on average in 1H26 to above 7% y/y in July. Hungary, Poland and Czechia also recorded a visible acceleration, with July growth reaching roughly 3–5% y/y. Slovakia moved from declining industrial production in the first half of the year to positive growth of more than 2% y/y in July, while Slovenia also improved. The picture remains considerably weaker in Romania and Serbia. Romania's industrial contraction deepened in July, which is consistent with the broader weakness in the Romanian economy. Serbia also shifted from marginally positive growth in the first half to a contraction of more than 2% y/y in July.

Market movements

Today, all eyes are on the US Fed, which decides on the level of interest rates. While the outcome of the meeting is not yet certain, it is becoming increasingly difficult to justify the FOMC’s wait-and-see stance. In addition to the interest rate decision itself, the new Summary of Economic Projections (SEP) will also receive a great deal of attention from the markets. Among the FOMC members’ expectations for key economic data in the coming years, those regarding the federal funds rate will take center stage. Investors should be prepared for a particularly wide range of opinions on the future interest rate path, as indicated by the divergent views already evident at the July meeting. A high degree of disagreement could further unsettle the markets. CEE currencies remain weaker against the euro this week, while yields have moved up across the region, with global developments being the key driver. The rising price of oil (Brent at USD 108 per barrel on Wednesday) is prompting CEE governments to maintain or introduce support measures for fuel and diesel prices. Hungary and Romania continue to keep diesel support schemes in place (Hungary plans to modify it though), while Czechia’s Industry Minister said the government is ready to cap electricity prices at the producer and trader levels if conditions deteriorate further.

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Erste Bank Research Team

Erste Bank

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