CEE: Fiscal data for the first quarter released

On the radar

• Unemployment rate increased in Poland to 5.2% according to adjusted national methodology.
• Today, ECB holds a rate setting decision in the afternoon.
• There are no releases scheduled in the region.

Economic developments

The recent release of government deficit and public debt data by Eurostat shows that in the first quarter of 2025, the seasonally adjusted general government deficit to GDP ratio stood at 2.9% in the euro area and in the EU. In the region, four out of seven CEE countries complied with 3% of GDP limit (Maastricht criteria) in the first quarter of 2025. Namely Czechia, Croatia, Slovakia and Slovenia reported government deficits between 2% and 3% of GDP. We prefer to look, however, on the 4Q rolling basis (so one-year average). In that comparison, Slovakia’s performance is not that outstanding as 4Q moving average stood at 5.1% of GDP in the first quarter 2025 marking stabilization of government deficit after rapid deterioration throughout 2023. As far as trends are concerned, only Czechia’s and Hungary’s positions have been improving lately. Croatia and Poland, on the other hand, have been experiencing gradual deterioration of fiscal stance. Romania ticked up and we believe that the fiscal package will keep Romania on track for visible improvements of government deficit in upcoming quarters.

Market movements

We do not expect any change in key interest rates at today’s ECB meeting. The central bank's next steps will be heavily influenced by developments in the tariff dispute with the US and the impact on growth expectations. Poland placed almost PLN 11 billion of government bonds with different maturities. S&P affirmed Romania’s outlook at BBB-. Outlook remains negative. According to rating agency, the fiscal consolidation measures should help reduce deficits to about 7.7% of GDP in 2025 and 6.4% of GDP in 2026 from 9.3% in 2024. Poland reshuffles government and reduce the number of ministries to 21 from 26. Poland will have one ministry for finance and economy. The polish zloty has been slightly weaker against the euro this week.

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