Croatia remains the only Central and Eastern European (CEE) nation yet to unveil its economic performance for 2024, as regional peers move ahead with their data releases. Czechia, Poland, and Serbia have already disclosed their preliminary fourth-quarter 2024 GDP estimates. Meanwhile, attention turns to Hungary, where the central bank is set to maintain its current monetary stance throughout 2025. Inflationary pressures and currency challenges continue to impede any prospects of interest rate cuts in the country.
Despite harsh remarks by US representatives at the Munich Security Conference, CEE bond markets have shown a muted response. Simultaneously, hawkish expectations from the Federal Reserve are curbing any further upward movement in gold prices. In the foreign exchange market, the EUR/USD pair remains robustly bid above the 1.0500 mark during the European morning session on Monday. The Hungarian central bank's rate-setting meeting this week is anticipated to leave policy rates unchanged, reflecting ongoing economic uncertainties.
This week also sees the release of producer price data across several CEE countries. A potential new EU central facility aimed at financing military expenditure is under consideration, adding another layer of complexity to the region's economic landscape. The EURHUF recently reached 404, influenced by global economic factors that are also impacting the Hungarian forint and Polish zloty.
In Slovakia, the government tapped into the international bond market, securing EUR 3 billion through a 15-year syndicated bond. This bond was issued at a spread of 130 basis points above the mid-swap rate, highlighting investor confidence in Slovakia's economic stability. Croatia is preparing to publish its fourth-quarter 2024 GDP data and its structure this week, providing crucial insights into the country's economic trajectory.
Slovenia is set to release a flash estimate of inflation for February this week, following a January increase in Hungary's inflation rate that has left little room for monetary easing. These developments underscore a complex economic environment across the region, marked by divergent fiscal strategies and responses to both domestic and international pressures.
The regional anticipation surrounding Croatia's forthcoming GDP data underscores the broader economic dynamics in CEE nations. While Czechia, Poland, and Serbia have moved forward with their economic disclosures, Croatia's pending release holds significant implications for market observers and policymakers alike.
Hungary's monetary policy remains a focal point as the central bank navigates a challenging landscape marked by persistent inflation and currency volatility. The decision to maintain current interest rates reflects cautious optimism amid uncertain economic conditions. Additionally, hawkish signals from the Federal Reserve continue to exert pressure on global commodity markets, tempering potential gains in non-yielding assets such as gold.
The muted reaction of CEE bond markets to geopolitical tensions points to a resilience that may be attributed to strong regional fundamentals or investor confidence in the long-term prospects of these economies. In contrast, fluctuations in currency valuations, including the EURHUF touching 404, highlight ongoing vulnerabilities influenced by external factors.
Slovakia's successful bond issuance demonstrates proactive fiscal management amid evolving market conditions. By securing EUR 3 billion through a syndicated bond with a favorable spread, Slovakia reaffirms its fiscal stability and attractiveness to international investors. This move comes as countries like Croatia and Slovenia prepare to release key economic data that will shape their policy responses in the coming months.