CEE: Flash 2Q25 GDP data and inflation

Flash 2Q25 GDP estimates will be a key event in the Eurozone and in a couple of CEE countries. On Wednesday, Czechia and Hungary will release preliminary estimates of economic performance in the second quarter and on Thursday Serbia will do the same. Apart from that, flash inflation estimates will be released in Croatia, Poland, Slovenia and Slovakia (HICP release). Throughout the week, several CEE countries will publish data on the performance of the retail sector and industry in June (namely Croatia, Serbia and Slovenia). Finally, on Friday, manufacturing PMI indices will be published in Czechia, Hungary, Poland and Romania as the first indication of sentiment at the beginning of the third quarter.

FX market developments

FX market performance was mixed in the region. While the Polish zloty has weakened against the euro, other currencies strengthened throughout the week. Poland faced the reshuffle of its government. Further, June’s retail sales and industrial output growth disappointed and that could add to the relative weakness of the zloty. The Governing Council of the ECB decided to leave all three key interest rates unchanged. The key deposit rate thus remained at 2%. Future decisions would depend on the outlook for inflation and the risks to it based on incoming data.

This week, 2Q25 GDP data may have an impact on the FX market, in Hungary in particular. If the economy stagnated in the second quarter, then a downward revision of full year growth forecasts is likely. A surprise to the downside may be potentially negative for the Hungarian forint.

Bond market developments

Romania’s Constitutional Court ruled that the fiscal consolidation package is in line with the constitution. Therefore, the first fiscal measures will be in force as of August 1. The second package that is being prepared should focus on restructuring state-owned enterprises as well as improving the capability of tax authorities to collect taxes in order to close the VAT gap. It is expected to be approved in mid-August and later in autumn a third package should be expected. S&P confirmed Romania’s rating and outlook, which we see as positive news, cementing Romania’s position as an investment-grade country. Romania sold RON 438.6mn in 2038 bonds that were priced to yield 7.11% amid strong demand and RON 800mn in bonds maturing in 2032. Bonds were priced to yield 7.31% and the bid-to-cover ratio was at 1.49. Further, Romania considers returning to the international bond market later this year to refinance part of foreign currency bonds maturing in 2026 (worth EUR 4.25bn in total). Czechia announced an issuance plan for August (CZK 20bn in Bonds and CZK 10bn in T-Bills). This week, Serbia, Romania and Czechia have bond auctions scheduled.

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