European Commission publishes new economic forecasts

On the radar

• Today, Hungarian central bank holds a rate setting decision. We expect stability of rates.
• Core inflation in Poland landed at 3.0% y/y in October.
• Average gross wage in September in Hungary was released at 9.5% y/y .
• At 9 AM CET, Czechia publishes producer price growth.

Economic developments

The European Commission (EC) published its Autumn 2025 Economic Forecast on Monday. The EC highlighted continued growth despite a challenging environment, noting that economic performance exceeded expectations in the first nine months of the year. Real GDP growth outpaced the annual expansion projected in spring. The EC now projects real GDP in the EU to grow by 1.4% in both 2025 and 2026, edging up to 1.5% in 2027. The euro area is expected to follow a similar trajectory, with growth of 1.3% in 2025, 1.2% in 2026, and 1.4% in 2027. As far as CEE region is concerned, the EC is more optimistic about developments in Croatia, Hungary, and Slovenia for both 2025 and 2026 compared to our - Erste Group - forecasts. In contrast, Erste Group’s GDP forecasts for Romania are higher than those of the EC. For Czechia, Poland, and Slovakia, differences between the two sets of forecasts vary by year but remain marginal. In Czechia, we expect slightly stronger growth in 2026, while in Poland we see 2025 development in better light. Overall, our key takeaway from the EC’s economic outlook is that the external environment should not significantly hinder growth in CEE, as global growth projections have improved.

Market movements

The Hungarian central bank is scheduled to announce interest rate decision and we expect no change in key policy rate amid elevated inflationary pressure. Further, according to Hungarian media, Hungary’s government may be negotiating a loan facility led by Citigroup as part of its “financial shield” it says it’s getting from the US. Prime Minister Orban also announced delay of hike in the excise tax on fuel from January to July. In Poland, central banker Janczyk sees small space for interest rates cut as soon as in December if inflation remains soft. EURCZK is marginally lower at the beginning of this week at 24.16, while EURHUF is at 384 and EURPLN at 4.23. On the bond market, Hungarian long-term yields returned above 7%. The spread against Romanian 10Y yields turned positive after almost two years in negative territory (i.e. with Romania’s yields above Hungary). Romania sold RON 447.76 million of 2040 government paper that were priced to yield 6.97%.

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