Look for:

Our offer for

Research Detail

2019/11/25 / Erste Group Research

Strength of CEE economies lies in domestic demand

This week, we should get confirmation that the strength of CEE economies lies in domestic demand as GDP structure will be published. Consumer confidence is strong, as the unemployment rate hit historically low levels and wages keep growing. Such a situation translates into robust private consumption - the pillar of the growth. There should thus be no surprise that trade, transport, accommodation and food services create the highest share of added value across the region. So far, investment activity has been relatively solid as well, while the weakening external environment is likely to weigh on the net exports contribution to growth. While in most of the countries the flash estimates from mid-November should be confirmed, in Croatia and Slovenia we will get to see the 3Q19 GDP dynamics for the first time. With the end of the week approaching, we will move our mindset into the fourth quarter already, as the data on industrial output and retail sales for October will be available for Croatia, Serbia, and Slovenia. These releases, alongside the Polish data, will become the first footprint of the economic performance of the region in the last quarter

Last week, the Czech koruna managed to gain even amid the worsening of global sentiment, while the Polish zloty weakened the most. The Hungarian forint was a bit strange, as immediately after the (non-event) central bank meeting, an unexpectedly strong appreciation came, followed by a decline by the weekend. The Romanian leu mostly weakened, on the back of the worrying fiscal situation, but after the adviser to the central bank governor carried out a verbal intervention (by saying that they do not expect the leu’s depreciation tendency to be long-term), the RON gained. A more sustained stability in the RON could only be warranted by reassuring fiscal news. CEE exchange rates are not far from our year-end forecasts.

Apart from the slight increase of Croatian LCY yields, and relative stability in Czech yields, 10Y bond yields declined across CEE by 6-15 basis points w/w. The fall in German Bund yields was not that pronounced, but UST yields fell 8-9 basis points in the same time. The strongest decrease in yields came in Hungary, but given that the outcome of the central bank meeting was no surprise, and there is no major change in fundamentals, we see 10Y Hungarian yields going up slightly from current levels. Generally speaking, 10Y yields are not far from our current forecasts in CEE.

PDF Download Download PDF (505kB)

General information

AuthorErste Group Research
Product nameCEE Insights
Topic in focusFX, Macro/ Fixed income
Economy in focusCEE, Croatia, Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia
Currency in focusCroatian Kuna, Czech Koruna, Euro, Hungarian Forint, Polish Zloty, Romanian Leu, Serbian dinar
Sector in focus-


We use cookies and web analysis software to give you the best possible experience on our website. By continuing to browse this website, you consent for these tools to be used. For more details and how to opt out of these, please read our Data protection policy.


Any information, material and services regarding financial instruments and securities provided by Erste Group Bank AG or any of its affiliates (collectively “Erste Group“) on this and any linked website hereafter (jointly the “Websites”) shall be exclusively to investors who are not subject to any legal sale or purchase restrictions (the “Interested Party“).

The publication and distribution of information as well as offering and selling of products and services described on the Websites is prohibited by law in some jurisdictions. For this reason, persons in countries in which the publication as well as the offering and selling of products and services described on the Websites are not permitted by law, must not enter the Websites and/or acquire the products displayed on the Websites.

Neither Erste Group nor any third party shall offer access to the Websites or offer the products to especially, but not limited to citizen/residents of the United States and “U.S. person” (as defined in Regulation S under the US Securities Act 1933 as amended). For this reason, the distribution or redistribution of the information, materials and products into United States or into any other jurisdiction where it is not permitted under the applicable law, as well as to the citizens/residents of these countries shall be prohibited. The securities displayed on the Websites have not been and will not be registered under the US Securities Act of 1933 and trading in the securities has not been approved for purposes of the US Commodities Exchange Act of 1936. For this reason the securities may, inter alia, not be offered, sold or delivered within the United States or, for the account and benefit of U.S. persons.

The Interested Party is solely responsible to examine, whether he may enter the Websites under the law applicable to it. Erste Group shall not be responsible for the distribution of content of any of the Websites to individuals or entities which provide false information about their right to enter the Websites. For this reason Erste Group shall not be liable for any legal claims or damages which may result from the unauthorized entering or reading of the Websites.

By agreeing to this hereto, the Interested Party confirms that
(i) It has read, understood and accepted this Information and the Disclaimer;
(ii) It informed itself about any possible legal restriction and warrants that it is not restricted or prohibited to enter the Websites according to any law applicable; and
(iii) It does not make available the contents of the Websites to any person who is not qualified by law to enter the Websites.