Citi(US:C)2025-10-19 15:58Summary of CEE Economics Conference Call Industry Overview - The report focuses on the macroeconomic trends and outlook for Central and Eastern Europe (CEE), specifically highlighting the economic conditions in Poland, Hungary, and the Czech Republic [1][2][3]. Key Points Poland - Economic Activity: There is a low probability of recession in Poland, with nowcasting models indicating an acceleration in GDP growth for Q3 [21][24]. - Labour Market: Despite economic recovery, employment is declining, particularly affecting young workers, although the overall jobless rate remains stable [25][28]. - Monetary Policy: Inflation has decreased below 3% due to a slowdown in utility prices and moderation in core inflation, with markets anticipating further rate cuts [32][34]. - Fiscal Policy: The Ministry of Finance expects a significant increase in public debt, with a slower narrowing of the fiscal deficit than previously anticipated. Heavy issuance of POLGBs is expected in Q4 [36][40]. Hungary - Economic Activity: No significant rebound in industrial output is observed, with recession risk indicators remaining high, although some improvement was noted in September [48][50]. - Labour Market: Average wages have slowed to 9% YoY, with public sector wages rising faster at 10%. The share of sectors with double-digit growth has decreased [54][56]. - Inflation Outlook: Headline inflation remained unchanged at 4.3% in September, with core inflation gaining momentum and nearly 60% of the core inflation basket growing at a double-digit annualized pace [60][64][66]. - Monetary Policy: The National Bank of Hungary (NBH) is expected to maintain cautious rates in Q4, with a narrow window for potential cuts in early 2026 [70][73]. Czech Republic - Economic Activity: Low and falling recession risks are indicated, with stable production of capital goods despite weak growth in Germany. Retail growth is solid, supported by positive real wage growth [81][85]. - Inflation and Monetary Policy: Headline inflation has slowed, but core inflation remains elevated, prompting the Czech National Bank (CNB) to signal a prolonged period of rate stability [87][88]. - Fiscal Policy: An expected issuance of around CZK 210 billion in Czech T-Bonds for 2025, with strategies to manage bond maturities in 2026 [90][93]. Additional Insights - The report emphasizes the interconnectedness of macroeconomic indicators across the CEE region, highlighting the importance of monitoring inflation, employment trends, and fiscal policies as they can significantly impact investment opportunities and risks in the region [1][2][36][70].