Eastern European economies continue to sputter

Significance

Even in Poland, a bright spot for the region, manufacturing activity remains in contraction territory, while private consumption and investment continue to expand modestly. Moreover, inflation rates across CEE have begun to pick up recently, strengthening the case for more prudent monetary policy.

Impacts

• Germany’s economy is expected barely to expand in 2024, with manufacturing activity remaining in deep contraction territory.
• Poland has experienced the sharpest rise in consumer confidence in the EU, underpinned by the government’s expansionary fiscal policies.
• Tight labour markets, loose fiscal policy and volatile asset prices will act as constraints on monetary policy, adding to growth concerns.