GDP structure releases across the region

This week begins with November's PMI releases for several CEE countries. The Economic Sentiment Indicator published last week suggests a slowdown in economic activity at the end of 2024. Furthermore, the GDP breakdown for 3Q24 will be known for all CEE countries by the end of the week. Serbia will be the first to publish the GDP breakdown on Monday, followed by Hungary (Tuesday), Slovakia (Thursday), and Romania (Friday). Based on this information, we will complete the detailed CEE outlook for 2025 in the following week. As far as economic performance in the fourth quarter is concerned, Hungary, Romania, and Slovakia will release retail sales growth for October, and Hungary will publish industrial output growth at the top. We will also see other releases such as producer prices in Romania and Serbia, or the unemployment rate in Romania. We should not forget the Polish central bank meeting on Wednesday, from which we expect stability of rates. Lastly, Romania held parliamentary elections over the weekend, while Fitch Ratings will evaluate Hungary's and Slovakia's ratings and outlooks on Friday after the market closes. We believe the ratings will not change in either country.

FX market developments

Over the week, the Hungarian forint weakened against the euro, as opposed to the Czech koruna or the Polish zloty. We associate such development (i.e. the Hungarian forint decoupling from its peers) with official information regarding personal nominations for the economic leadership and governance in the country. Varga is set to take over the National Bank of Hungary as of March 2025. At the same time, the Ministry of Finance and Economy are expected to be combined, with Economy Minister Nagy leading the 'joint' ministry. This week, the Polish central bank holds a rate-setting meeting, and the interest rate decision will be announced on Wednesday. We do not expect any change in the key policy rate.

Bond market developments

The Romanian bond market was impacted by the surprising outcome of the first round of the presidential race and the far-right candidate Georgescu's victory. As a consequence, long-term yields increased at the beginning of the week, but it seems that the situation has stabilized, with the 10Y yield close to 7.2% – 7.3% at the end of the week. In other CEE countries, the long end of the curve moved down to a lesser or greater extent. While 10Y yields in Czechia or Poland moved roughly 5bp lower, in Hungary it moved down by as much as 20bp. This week, T-bill auctions are planned in Czechia and Hungary.

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