Romania launches its new PMI index

On the radar

• In Poland, 4Q23 GDP data was confirmed at 1.0% y/y (1.7% y/y seasonally adjusted) driven by the investment growth while private consumption contracted.

• In Serbia 4Q23 real GDP rose 3.8% y/y. The 2023 GDP growth landed at 2.5% y/y driven by the solid private consumption and public spending.

• In Serbia, retail sales grew 4.1% y/y in January while industry expanded by 6.9% y/y.

• In Slovenia, flash inflation arrived at 3.4% y/y in February, while in Croatia PPI index declined by -1.4% y/y in January.

• In Czechia, 4Q23 GDP was confirmed at -0.2% y/y. The GDP decreased for the whole year 2023 by 0.4%. The year-round development was negatively influenced by the final consumption expenditure of households and by a change in inventories.

• Today, Croatia will release flash inflation for February as well as other Eurozone countries will see the estimates of HICP inflation in February.

Economic developments

Thanks to the collaboration between S&P and BCR, the PMI index for Romania was launched today. Romania thus joins Czechia and Poland within the region to be covered within the S&P Global methodology. Hungary also offers the Manufacturing PMI index though the methodology is different. The manufacturing PMI Index in Romania fell to 47.1 in February from 47.6 in January that is the lowest reading since October 2023. The drop was driven by a drop in the new orders as well as prolonged delivery times. February is the eighth consecutive month of contraction. In Poland, the manufacturing PMI Index increased to 47.9 in February from 47.1 in January surprising to the upside. It is almost two years when the manufacturing PMI Index is below the threshold of 50 pointing to ongoing contraction of the economy. On a positive note, the index has been climbing up lately. In Czechia, the PMI of manufacturing jumped to 44.3 in February, which is a major positive surprise. The business confidence indicator is thus the strongest since March 2023. Finally in Hungary, the Manufacturing PMI went up to 52.2 in February.

Market developments

The CEE currencies are weaker against the euro week to date. The Hungarian forint has been underperforming as it depreciated roughly 1% against the euro throughout this week. Bigger than expected interest rate cut (100 basis points) could add to the weakness of the Hungarian currency. The conflict between the government and the central bank over the government’s plan to amend the central bank law could add to depreciation pressure as well. On the bond market, long-term yields are higher at the end of the week everywhere in the region apart from Poland. The European Commission has also adopted a decision confirming Poland's participation in the European Public Prosecutor's Office (EPPO). Poland will become part of the EPPO as of the date of the entry into force of the Commission's decision.

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