Poland’s Ministry of Finance just declared a new record budget deficit for this year. The new projection is now up to 6.9% of the country’s economic output. This change reflects the increasing need for government investment. At the same time, borrowing requirements are about to skyrocket over the next several years. The ministry has set a gap of 6.5% of GDP for 2026, indicating ongoing fiscal challenges as the nation navigates its economic landscape.
Today’s announcement has already triggered a noticeable jump in Poland’s long-term yields. This change is a sign that the market is concerned about our fiscal situation. The Polish government is counting on its borrowing needs to swell, even during an election year in 2026. They expect to need 423 billion zloty, or roughly $116 billion, against a revised number of 352 billion zloty for this year. Such developments underline the critical balance policymakers must maintain between stimulating growth and managing public debt.
Economic Sentiment Across Central Europe
In spite of these fiscal changes, Poland’s ESI proved surprisingly resilient, tracking very closely with the values seen in July. This stability in inflation adjustment implies that consumer confidence so far has yet to be heavily affected by the newly revised realizes shortfall. Going against the general EU trend, Slovenia’s ESI for August is quite a strong positive improvement. This change is indicative of a growing sense of optimism among consumers and businesses across the region.
Slovenia’s economic indicators reveal mixed signals. In Slovenia, retail sales in July 2023 fell by 0.6% from a year ago. This drop underscores possible cracks in consumer spending, despite rising sentiment. The country is set to release flash inflation data at 10:30 AM CET, which may provide further insights into its economic trajectory.
Regional Economic Developments
Hungary is on a similar boat, recently seeing waves in its economic sentiment, as made apparent by an increase in its ESI for the month of August. The unemployment rate remained unchanged at 4.3% in July, suggesting stability in the labor market as the country prepares to release trade data at 8:30 AM CET. These figures will be critical in determining the nature of Hungary’s external trade movement, in the context of a larger regional trend.
Czechia will release its GDP by structure for Q2, at 9 AM CET. We hope this release brings more transparency to all of that economic performance. Romania has apparently taken a dive into the financial markets. Just recently the country placed RON 500 million in government securities maturing on 2035 with a yield of 7.38%.
Both Croatia and Serbia will publish germaine economic data in the near term. Look for July’s retail sales numbers at 11 AM CET and industrial production growth at noon CET. Together, these reports will provide on-the-ground perspective to the new and dynamic nature of the economic stage across the Central European landscape.