Socio-economic background the strongest driver of skills disparities

On the radar

• Inflation rate in Hungary eased to 3.8% y/y in November
• Trade surplus in Slovakia reached EUR 560.2 million
• Producer prices in Croatia grew 2.0% y/y November
• Trade deficit in Croatia was EUR -1553 million.
• Romania released trade balance in October. The deficit of EUR 3005 million was registered.
• At 9 AM CET, Slovakia publishes industrial output growth in October, while Slovenia has it scheduled at 10.30 AM CET.
• Czechia will release details on inflation at 9 AM CET.

Economic developments

According to the latest OECD Skills Outlook, disparities in skills like literacy, numeracy or adaptive problem solving reduce opportunities for economic growth by wasting and misallocating talent. OECD founds that socio-economic background is the strongest driver of skills disparities. Among these socio-economic factors, parents’ education and occupation are strongly related to higher score. Further age plays a role as well as childhood residence (city as opposed to rural area). Finally, there are some gender disparities across the skills, yet the differences are rather marginal (women have higher proficiency in literacy, while men have higher proficiency in numeracy and adaptive problem solving) Especially if compared to parents’ background. Looking at the region, in Hungary parents’ education and occupation is associated with the highest difference in scores in literacy (as presented on the graph) but also numeracy. In other CEE countries the score differences are close to or below the OECD average. As these disparities arise very early in life, OECD concludes that reducing disparities related to socio-demographic characteristics from the earliest stages of education is essential.

Market movements

EURPLN returned to 4.22, while the Czech koruna and the Hungarian forint remain slightly weaker against the euro this week. The volatility on the bond market has been limited. Today, The FOMC holds a rate setting meeting (due 8 PM CET). We expect US key interest rates to be cut by 25 basis points. The upper limit of the federal funds rate will thus be 3.75%. As for news from the region, the conflict within the Poland’s central led to three members of the NBP Management Board being deprived of their supervision over central bank departments. Romania’s ruling coalition will discuss next year’s budget in late January as it must first agree on several key reforms, including those of public administration. Finally, President Donald Trump denied offering Hungary a financial lifeline that Prime Minister Orban promoted following his visit to Washington.

Download The Full CEE Macro Daily