The European Commission has only recently published its new economic forecasts. Their projections paint a rosier picture for many Central and Eastern European countries. Analysts have increased their forecasts for Romania and Slovakia by 0.4 percentage points and 0.3 percentage points in turn. The Commission now foresees the EU growing by 1.1% in real GDP in 2025. In contrast, the euro area is projected to grow by only 0.9%. These updates reflect a broader trend of cautious optimism as regional economies adjust to recent challenges.
Analysts pointed out that Romania is the most remarkable case, with the largest forecast gap, diverging by as much as 0.9 pp. The economic reality in Romania is a difficult one, particularly following the controversial presidential elections won by Klaus Iohannis. These elections have delivered an utterly unexpected relief to the country’s concrete fixed income market. Evidence of this rising investor confidence is easily found, as shown by the fact that Romania’s leu strengthens 1.3% versus the euro. At the same time, 10-year Romanian government bond yields fell sharply by 70 basis points Monday.
Slovakia’s Economic Indicators
Slovakia’s optimistic projection is bolstered by its forward-looking economic indicators. Meanwhile, today the country gets very important data on wage growth. This deeper picture, including the current account balance, is important to understanding India’s economic trajectory. Analysts are all eyes on these numbers. They should provide important markers of our nation’s short-, medium-, and long-term economic conditions, and help define future expectations.
Slovakia’s debt agency had little trouble last week as it successfully raised EUR 606.8 million. They did this by re-opening government bonds that will mature in 2028, 2031, 2033, and 2035. This successful issuance indicates overall healthy demand from investors for such a large issuance and at the same time underscores confidence in Slovakia’s fiscal management. As analysts forecast these trends, they hope to see Slovakia demonstrate resilience in the face of increasing global economic challenges.
Regional Economic Dynamics
In contrast to Slovakia and Romania, Slovenia’s forecast may not have fully accounted for a significant negative surprise from Q1 flash GDP data. This miscalculation may have very serious repercussions on Slovenia’s growth forecasts going forward, as analysts scramble to reassess what this unanticipated slump means.
In April, Czechia was the only EU country to report a PPI of -1.3% year-over-year. This historic decline has raised fears that the economy may be experiencing deflationary pressures. Numbers like these would usher real and immediate changes to monetary policy as policymakers attempt to step in and shore up growth.
Poland’s assets had a muted response to the elections, which took place on Sunday. This points to a self-imposed status quo as market participants wait and see before making big moves. Investors are probably trying to gauge how the new political makeup will impact the direction of economic policies and therefore market conditions.