Outlook for industry in CEE is not improving

On the radar

• Czechia will release producer prices at 9 AM CET.

• Slovakia and Serbia will publish February’s current account data today.

• In the afternoon, Poland will release core inflation in March.

Economic developments

The beginning of the year was rather weak for the industry sector across CEE. In all countries, apart from Czechia and Croatia, the average growth in January and February of 2025 was in the red. Compared to industry performance in 2024, the growth is slightly stronger not only in Czechia and Croatia but also in Romania and Serbia. Croatia clearly overperformed. In Poland, Slovakia and Serbia, we saw industry expanding in 2024 while in the first two months of 2025 industrial output growth declined. In Hungary, contraction of the sector continues and has unfortunately been even more extensive. In the first two months of this year industrial production was 6.4% lower than in the same period of 2024. The outlook remains hazy for the whole region. We have seen some improvement of the sentiment lately (for example Poland’s PMI Index above the threshold of 50) but the tariff war between the US and other countries could hamper manufacturing sentiment in the coming months. Further, positive effects from increased defense and infrastructure spending in Germany or cyclical rebound of that economy will be offset by new barriers for international trade.

Market developments

The long end of the curve has shifted down this week. On the FX market we see mixed performance. While EURCZK and EUHUF moved higher, EURPLN went in the opposite direction, and it is at 4.30 on Wednesday morning. There is no other related news in the region. As far as political developments are concerned in Poland and Romania presidential campaign is ongoing. The polls suggest that the coalition candidate Trzaskowski would win in Poland. In Romania, the mainstream candidate Antonescu would secure 50% of votes in the runoff and get ahead of far-right candidate Simon according to latest polls.

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