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2018/09/14 / Erste Group Research

What is up in CEE? 2018Q3

Growth is likely to remain healthy going forward in CEE. After the publication of 2Q18 GDP numbers, we now see this year’s economic expansion at 4.2%, after the 4.1% seen when our previous ‘What’s up in CEE’ was published.

Labor markets in CEE continued their tightening and some countries seem to have got really close to the technical floor of full employment. The tightening of the labor market has also started to be influenced by negative demographic developments. While CEE countries preserve about a 30% margin in unit labor costs vs. Germany, the pressure to reform the economies is increasing.

A special report published by our Czech team in early August showed that the Czech real GDP would slow by 0.2-0.3pp to 0.6-0.7pp if US imports for cars made in the EU dropped by 10-25%. Replicating this approach yields similar results for Slovakia and Hungary, while keeping the downside lower for the less open economies in CEE. In a hypothetical scenario, where demand for all imported products by the US fell 10%, with cascading effects on the EU and in particular on Germany, trade balances in the CEE would deteriorate by 0.5-1.5 percent of GDP.

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General information

AuthorErste Group Research
Product nameCEE Economies Special Report
Topic in focusFX, Macro/ Fixed income
Economy in focusCroatia, Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia, Slovenia
Currency in focusCroatian Kuna, Czech Koruna, Euro, Hungarian Forint, Polish Zloty, Romanian Leu, Serbian dinar
Sector in focus-


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