Romania’s Constitutional Court last week invalidated a major government ordinance. The bill proposed increasing the retirement age for prosecutors and judges and restructuring their pension schemes. This decision is emblematic of increasing tensions in the country and outcry against destructive legal reforms. The bigger Central and Eastern Europe (CEE) region features a mixed economic picture. These investment trends depict the contrasting approaches and consequences between two bordering countries.
The debunked legislation in Romania shows that the difficulties of getting through a genuine judicial reform are very much alive. The overarching aim of the federal government was to address fiscal pressures due to the increasing costs of pensions. To do this, they suggested raising the retirement age among legal staff. The court’s dismissal, while certainly disappointing, opens a critical door to questioning the government on its commitment to making needed reforms. This decision could affect judicial efficiency and accountability in profound ways.
Investment Patterns Across the Region
Investment per capita across CEE countries varies widely, especially between Poland and the lowest per capita investment on the German side. This included, for example, replacement investments accounting for 63% of total investments in Germany. This transformation reflects a clear desire to prioritize hangar preservation over the addition of new capacities. Poland presents a more positive picture. In comparison, that accounted for a high industrial output growth of 7.4% year-on-year in September, but it invested the lowest in capacity expansion.
Further adding to Poland’s worsening economic picture are falling producer prices, with a y-o-y drop of 1.2% in September. Recent weakening in the industrial sector suggests a growing risk of pricing pressures. It casts doubt on the ability to maintain recent growth in output. Industrial employment figures in Poland dropped by 0.8% year-on-year. This drop is indicative of a trend where despite record production, it isn’t resulting in new jobs.
Regional Economic Indicators
The picture is similar for other countries in the region, all of which are grappling with their own economic disasters. And with Slovakia seeing a current account deficit of EUR 352 million, questions were raised about its external economic stability. CEE countries such as Czechia, Romania, Hungary and Slovakia are preparing to increase their capacities. At the same time, Poland’s lack of willingness to prioritize investments in new capacity could dampen its long-term economic growth.
Even with these headwinds, the European Investment Bank’s (EIB) Investment Survey for 2025 reveals remarkable resilience. Overall investment levels across Central and Eastern Europe (CEE) are nothing to scoff at. The data indicate that appetite for new investments has at least partially waned in the face of continued economic uncertainty.
Currency Stability and Monetary Policy
For the rest of this week, the Czech koruna has been stable. This indicates a wait-and-see approach to market sentiment as investors look forward with optimism but uncertainly towards what’s next. In Hungary, the regional outlier, the central bank is widely expected to keep its key policy rate unchanged when it announces its decision later today. This monetary policy stability represents a desire to keep economic equilibrium amid low and high inflation and growth.