Regained confidence in the economic outlook

On the radar

• Today at 9:00 CET, Czechia will publish its July inflation data. We expect inflation to edge higher, rising from 1.5% in June to 1.8% in July.

Economic developments

As noted in our previous daily report, the average consumer confidence index across the CEE8 reached a five-year high in July, supported in part by an exceptional improvement in Hungary. Against the backdrop of somewhat softer 2Q26 GDP figures, it is worth examining households' expectations regarding the economic outlook over the next 12 months, as these expectations can influence spending and saving decisions. With the exception of Hungary and Slovakia, households' assessment of the economic outlook weakened slightly during 2Q26. However, the July data point to a renewed improvement, not only relative to 2Q26 averages but, in many cases, also compared with 1Q26 levels, so before the outbreak of the Iran war. This suggests that private consumption is set to regain momentum at the beginning of 2H26 and could continue to be one of the key drivers of economic growth across the CEE region.

Market movements

The Hungarian forint strengthened markedly yesterday, recovering a large share of the losses recorded in previous days. The situation on the Danube River remains critical and is affecting electricity generation across several countries in the region. In Romania, Dacia and Ford have temporarily halted production and brought forward their summer shutdowns to the next two weeks in an effort to conserve energy and reduce the risk of power shortages. Government bond yields drifted lower across CEE, with the exception of Romania, where markets remain focused on the upcoming Moody's rating assessment. Romania narrowly avoided a downgrade by Fitch last Friday, keeping investors attentive to further developments on the sovereign rating front.

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