Now, all eyes are on Romania’s central bank with a key rate-setting meeting today. This move comes amid conflicting economic signals across Central and Eastern Europe (CEE). As other countries ring in their first-quarter growth figures, the region’s recent economic performance is a tale of strong growth and deepening declines.
As a result, Romania’s economy booked an anaemic -0.2% year-on-year contraction, marking a stalling recovery 1 year ago today. The central bank is widely expected to hold interest rates steady in today’s meeting. This decision reflects our cautious optimism in the face of anemic growth. Later this afternoon, Poland will publish its CPI excluding food and energy inflation figures. This common operating picture will provide further insight into the economic challenges weighing on the region.
Slovenia Faces Economic Contraction
Slovenia, in its latest Article IV Consultation Report, paints a disturbing picture with GDP contracting by 0.7% YOY. This is the first quarter of negative growth since the fourth quarter of 2020. This sudden shock casts doubt on whether the country’s recovery from the global economic crisis has legs and exposes cracks in the foundations of its economic rebound.
Analysts and policymakers are clamoring for additional information on Slovenia’s GDP. They cannot know until late May or early June, which will provide a bit of insight into what has caused this unexpected contraction. The drop could be indicative of larger struggles hitting the smaller economies in the area.
Mixed Growth Signals from Serbia and Slovakia
Unlike Slovenia, Serbia and Slovakia both had positive annual growth, but both came in below market expectations. Analysts were expecting the two countries to report even better growth numbers, leading to worries about the strength of each country’s economic recoveries.
Of the other European economies, Serbia’s economy was remarkably resilient, growing strongly in year-on-year terms, and Slovakia had similar trends. The growth dynamics in both countries look very encouraging. Despite these successes, they still face considerable challenges that could hamstring their future performance.
Hungary’s economy zeroed out in year-on-year terms, making the overall picture for the region even cloudier. This contrast of stagnation in Hungary and contraction in Slovenia further emphasizes the divergence of economic fortunes between CEE countries.
Poland’s Economic Outlook and Upcoming Elections
Poland’s economic performance is a third major focal point as it just released a 1Q25 GDP growth rate of 3.2% YoY. This figure is a sign of a robust recovery compared to its close neighbors. The country is under immense pressure as it holds the first round of presidential elections. Political developments will shape the outcome of economic stability and investor confidence in the months ahead.
Poland’s April inflation rate was marginally revised, coming in at 4.3%. This is a reflection of ongoing inflationary pressures that are eroding consumer purchasing power and will affect economic policymaking. The release of core inflation data later today is anticipated to provide further clarity on price trends in the country.