Central Europe

Current Economic Outlook

The CE‐4 (Czech Republic, Hungary, Poland and Slovakia) are EU newcomers whose soaring growth rates earlier this decade are now things of the past. These economies are all looking at bleak growth pictures in 2009 obscured by a combination of falling exports, slowing capital inflows, tightening credit and rising unemployment. Only Poland is expected to show positive growth this year, albeit below trend, in the range of 0.5% to 1.0%. The other three economies are all expected to sharply contract, underperforming average growth in Latin American and Asian emerging markets. Hungary’s economy, the worst‐off, is expected to contract 7%. Some degree of economic stabilization is expected next year, although the outlook is highly uncertain. Not all CE‐4 economies are in the same boat. These economies are a disparate group in varying degrees of economic health. Poland, for example, has distinguished itself as the EU’s fastest growing economy in Q2, expanding 1.1% y/y. Hungary continues to be the region’s growth laggard and stands out as the CE‐4 country hardest hit by the global turmoil.

Read the latest RGE Global Economic Update.