Overheating is among risks for Central-Eastern Europe
Tuesday, June 12, 2018
Subject
The economic outlook for the five leading CEE economies.
Significance
First-quarter GDP outturns in Central-Eastern Europe (CEE) were mixed. While Poland and Hungary surprised on the upside, the pace of economic expansion was less robust in the Czech Republic and Romania. After a strong cyclical upswing in GDP last year, economic growth appears to have peaked in the first quarter and economic growth is likely to moderate in 2018.
Impacts
- In 2018, Romania, Slovakia and Poland will grow the fastest; the Czech Republic and Hungary will grow less robustly.
- With some economies managing to absorb EU funds at a faster pace than others, growth patterns are expected to diverge further.
- In Poland and Hungary, monetary conditions are expected to remain ultra-loose until at least end-2018.
- Weaker GDP growth rates are expected next year, particularly in the absence of structural reforms to tackle labour shortages.