Central European governments are making serious strides to rein in their economic woes. Debate on fiscal policy has become increasingly prominent in Poland. The country is now aiming for a deficit around 6% of GDP this year. And today, the Polish central bank is holding an interest rate meeting. A decision announced on Wednesday will set an important precedent for the future of similar economic undertakings.
In Hungary, the surprise number that came out was that the government increased its reported annual inflation rate to 3.3% for December. The country is still dealing with its past budget deficits. In 2025, it fell short by a staggering 4 billion miles. In response, Hungary has recently lowered its 2026 deficit targets, signalling the growing imperative for economic reform and fiscal stability.
Inflation and Economic Goals
That’s struck by extreme inflation – perhaps the leading concern currently in the region. Today at 9 AM CET, Czechia will be publishing its inflation figures, closely followed by current account data at 10 AM CET. This series of reports will deepen understanding of the country’s economic performance and guide better policy decisions going forward. The government of the Czech prime minister is coming under growing pressure. Yet its fragile coalition has called such a vote of confidence in parliament, and a resolution is expected on Wednesday.
The economic and political landscape in Romania is a challenging environment. In 2024, the country is expected to run a record-high 9.3% of GDP deficit. For 2025, it is already forecasting a deficit near 8%, with an official target of 8.4%. This situation highlights the ongoing fiscal struggles within the government as it strives to implement policies that can stabilize the economy.
Regional Fiscal Adjustments
Poland has gone further with recent fiscal corrections along the lines of Hungary’s. Both countries are working to make their 2026 deficit targets less stringent after having missed their earlier targets. Poland, like Hungary, is running into the sand in attempts to rein in public expenditure while making efforts to jump start economic expansion. The focus on reducing the deficit to around 6% of GDP this year indicates a commitment to fiscal responsibility despite previous failures.
Serbia’s economic policy has not changed, with the central bank maintaining the primary policy rate unchanged at 5.75%. The goal with this decision is to provide some stability during a time of unsure inflation. In December, Serbia posted a moderate cooling of inflation—down to 2.7% y-o-y—indicating the brightening medium-term perspective for the country’s economic fortunes.
Future Considerations
Meanwhile, the war has stressed Central European nations with economic challenges. The dynamic of high inflation rate, high interest rate, large budget deficit will be key to their recovery. So whatever fiscal changes are made, policymakers should focus on ensuring that fiscal responsibility does not come at the expense of economic growth and stability.
The next moves by central banks and national governments will make long-term marks on their domestic economies. Investors and analysts will follow these developments with great expectation as they play out over the next few weeks.