Updated OECD forecasts see CEE growth slightly more pessimistic

Erste Bank Research Team Erste Bank

On the radar

Inflation rate in Croatia landed at 3.8% y/y in November.
Today, Poland’s central bank announces interest rate decision, while Hungarian central bank publishes minutes.
Producer prices in Romania for October were reported at 8% y/y.

Economic developments

OECD in the latest economic outlook admits that the global economy has been resilient this year, despite concerns about a sharper slowdown in the wake of higher trade barriers and significant policy uncertainty. According to OECD, economic activity has held up thanks to front-loading of production and trade or strong AI-related investment. Fiscal or monetary policies have been also favorable. The full effect of tariffs is yet to be felt in higher prices or lower investment activity as the pass through process (of higher tariffs) is lengthy and rather gradual. Cautiousness is reflected in the growth forecasts as for couple of CEE countries OECD is more pessimistic regarding growth prospects than we are. Namely, OECD expects lower growth in 2026 and 2027 in Czechia and Romania. In Poland, 2027 growth forecast is more conservative in case of OECD. In other countries (Croatia, Hungary, Slovakia and Slovenia) our forecasts match the OECD forecasts. As for growth drivers, in general, private consumption growth is expected to slow (real income growth moderates, labor market shows signs of easing), while investment should remain strong.

Market movements

Today, in the afternoon hours Poland’s central bank will announce interest rate decision. The probability of interest rate cut increased lately as November’s inflation not only declined but also surprised to the downside. If such scenario materializes, we will be adjusting our interest rate outlook accordingly and will see terminal rate at 3.5% or lower. Czech central bank Governor Michl said he expects stability of rates when the central bank meets in December. Hungarian Ministry of Economy said that Hungary seeks €17.4b in total funding from the European Union’s defense investment program, in order to lower its borrowing costs and strengthen the defense industry. Ministry estimates that such financing would cut borrowing costs by 200bps compared to the market conditions.

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Erste Bank Research Team

Erste Bank

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