|

IMF global growth forecast

On the radar

  • Serbia’s central bank kept policy rate unchanged at 5.75%
  • Non-seasonally adjusted industrial output declined by -1% y/y in Czechia in May. Share of unemployed remained flat at 4.8% in Czechia.
  • Industrial production in Slovakia dropped by -2% y/y in May
  • Today, Romania will publish trade balance in May at 8 AM CET
  • Czechia will show June’s inflation structure alongside import and export prices at 9 AM CET
  • Slovenia is expected to release industrial output growth in May (10.30 AM CET)
  • At 11 AM CET Croatia will publish producer prices

Economic developments

The IMF underlined in its recent update of the World Economic Outlook that the global economy has, so far, weathered the shock from the war better than initially feared. Furthermore, the IMF points out that the negative supply shock induced by the war in the Middle East is being offset by a positive technology shock. The outlook remains uneven, however, as the war-related shock is weighing on energy importers and vulnerable economies, while AI-driven demand is supporting countries integrated into the global technology value chain. All in all, the IMF projects global growth of 3.0% in 2026 and 3.4% in 2027. Although no forecasts are provided for most CEE countries (apart from Poland, which is expected to grow by 3.4% in 2026 and 2.4% in 2027), the region’s key external markets—namely Germany and the euro area as a whole—are expected to expand moderately this year and improve their performance in 2027. The euro area is projected to accelerate to 1.2% growth in 2027 from an expected 0.9% in 2026, while Germany is forecast to grow by 0.7% in 2026 and 1.0% in 2027.

Market movements

Serbia’s central bank kept its key policy rate unchanged at 5.75% (with the deposit facility rate at 4.5% and the lending facility rate at 7.0%), extending its pause in monetary policy that has been in place since September 2024. The decision was fully expected, and the accompanying statement brought few changes. The central bank remains in a wait-and-see mode, with the energy shock stemming from the Middle East continuing to be the dominant concern. Geopolitical risks have risen again this week following US strikes on Iran and concerns that the conflict could escalate further. However, the US has stated that technical talks are continuing despite the attacks. Meanwhile, Brent crude oil prices eased towards USD 76 per barrel. As for other global developments, the minutes of the ECB’s June meeting showed that policymakers remained concerned about persistent energy-related inflation pressures. At the time, markets were pricing in further interest rate hikes, but the situation has since stabilized. We continue to expect policy rates in the euro area to remain unchanged this year. Turning back to central banks in the region, Poland’s central bank governor, Adam Glapinski, struck a dovish tone during Thursday’s press conference. He described members of the Monetary Policy Council as “cautiously dovish” and presented himself as the least cautious among them, characterizing his own stance as “definitely dovish”. He suggested that, provided the global environment remains as stable as it is today, he may submit a motion for an interest rate cut after the summer break—although he envisages no more than a single 25bp reduction.

Download The Full CEE Macro Daily

Author

Erste Bank Research Team

At Erste Group we greatly value transparency. Our Investor Relations team strives to provide comprehensive information with frequent updates to ensure that the details on these pages are always current.

More from Erste Bank Research Team
Share:

Editor's Picks

GBP/USD holds gains below 1.3450 as markets bet on more BoE rate hikes

GBP/USD holds moderate gains but stays below 1.3450 in the European morning hours on Friday. The British Pound gains amid optimism on the UK government leadership transition and Bank of England rate hike bets. Meanwhile, the US Dollar loses ground on Middle East de-escalation and receding Fed rate hike expectations.

EUR/USD advances to 1.1450 on softer USD, ECB rate hike bets

EUR/USD advances to near 1.1450 in the early European hours on Friday, bolstered by a softer US Dollar. The European Central Bank is grappling with elevated core inflation, forcing traders to price in more aggressive tightening despite mixed guidance from ECB officials, lending support to the pair.


Gold flat lines above $4,100 amid weaker USD, Fed hike bets and Iran risks

Gold reverses a modest Asian session dip to the $4,109-$4,108 region, though it lacks bullish conviction. The US Dollar selling remains unabated for the third consecutive day in the wake of Wednesday's less hawkish FOMC Minutes and offers some support to the commodity. However, prospects of a Fed rate hike in 2026 remain active.

Zcash: Retail demand lifts ZEC price on new Ironwood shielded pool announcement

Zcash price shows mild recovery during early Asian hours, rising toward the $500 mark. Retail demand supports ZEC's recovery, with an 18% rise in its futures Open Interest, likely linked to the announcement of the Ironwood shielded pool. Technically, ZEC should clear a key Fibonacci resistance level near $520 to test its all-time high of $690.

Five sessions, one round trip: Why the whipsaw is exactly what Warsh ordered

Markets opened July with a December hike as the base case and spent five trading sessions unlearning and relearning it. A 57K payrolls print bled the tightening bets out of the strip; a re-shut Strait of Hormuz is pushing them back in. Wednesday's minutes from the June Federal Open Market Committee meeting landed mid-round-trip, describing a world that had already stopped existing.

Bye, forward guidance: How to trade when central banks choose silence

Central banks have spent years telling markets what might come next. Now, traders face the possibility that they say a lot less. From the Federal Reserve to the European Central Bank and the Bank of England, policymakers are pushing back against forward guidance.