Industry in CEE suffered also last year

On the radar

• Industrial production in Romania declined -3.4% y/y in December.

• At 10 AM CET Poland will publish 4Q24 GDP growth and Czechia will release current account data.

• At noon CET Serbia’s central bank will announce interest rate decision. We expect no change.

Economic developments

Today’s release of Romania’s industrial output growth in December completes the dataset of the industry performance last year. Unfortunately, industrial production contracted in 2024 in most of the CEE countries. Industry expanded only in Poland, Slovakia, and Serbia last year. In other countries, the average growth rate of industrial output remained negative in 2024. It should be noted, though, the contraction was less extensive compared to 2023 in Czechia, Hungary, Romania, and Slovenia. Croatia is an outlier with industrial production decline bigger in 2024 than in 2023. In general, the crisis of the automotive industry, which is felt especially in Germany, has not been bypassing the region. Serbia, on the other hand, is benefiting from vivid investment activity as the country set in motion its 'Leap into the future 2027' investment program.

Market movements

Serbia’s central bank holds a rate-setting meeting today. We expect Serbia’s central bank to remain on hold due to still relatively high inflation and uncertainty about a global trade war which could ultimately be pro-inflationary. The CEE currencies continue to strengthen against the euro. EURPLN is at 4.16 while EURHUF is as low as 401. EURCZK moved toward 25.05. We believe that global factors are behind such development as development in the region is quite homogenous. Long-term yields have been higher since the beginning of the week, however.

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