Employment rate grows across CEE, duration of working life rises

On the radar

• Fitch affirmed Croatia’s rating at A- with stable outlook.

• Moody’s affirmed Romania’s rating at Baa3 but change outlook from stable to negative.

• Fitch affirmed Poland A- with stable outlook.

• In Czechia, February producer prices were published at -0.1% y/y.

• At 10 AM CET, Czechia will release current account data in January.

• Croatia will release final inflation data in February at 11 AM CET.

• Poland will release trade and current account balance in January as well as core inflation in February at 2 PM CET.

• Current account data is due in Romania as well today.

Economic developments

In the fourth quarter of 2024, the employment rate of people aged 20-64 in the EU stood at 75.9%, stable compared with the third quarter of 2024. In the CEE7, the employment rate in 2024 reached 76.6%. The lowest employment rate is in Croatia and Serbia. The highest, on the other hand, is in Czechia. Looking from a broader perspective, the employment rate has increased by more than 10 percentage points in the region over the last decade. In the face of demographic changes the space for further substantial growth of employment rates seems limited at this point. Especially, the duration of working life has also increased. Ten years ago, a 15-year-old person was expected to work 33.1 years, while in 2023 the duration of working life averaged at 35.4 in CEE7. The CEE region benefited from inflow of Ukrainian refugees in recent years as well. The successful accommodation of them into the labor market only confirms the labor market tightness and challenges ahead.

Market developments

While there was no change in rating and outlook assessment in Croatia and Poland, Moody’s changed the Romania’s outlook to negative from stable and matched the recent assessment of Fitch and S&P. We do not expect that this decision will have any major impact on the market as it has been mostly lining up with other rating agencies. The Romania’s electoral bureau on Saturday cleared the candidacy of George Simion to take part in May’s presidential election. CEE currencies continue to hold strong against the euro, while the bond market showed mixed performance over last week. This week, the US Fed meeting will be the key event for the markets. Although economic concerns have become increasingly dominant in recent weeks, we do not expect key interest rates to change at this point of time.

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