Questions on securities

Monday - Friday 09:00-17:00

Quick guide

Choose your country

Research Detail

2022/06/20 / Erste Group Research

Wake-up of services softening slowdown


Strong 1Q22 figures stand behind the upward GDP growth revision for 2022. The outlook for 2023 has been lowered. The services sector is exhibiting very robust growth, while other sectors are slowing down. 10Y LCY bond yields should go 80-120bp lower in 2H22 once inflation peaks.

Surprisingly strong 1Q22 figures led us to revise our full-year forecasts for 2022 upwards, despite very high external risks and rising inflation. We expect CEE economies to expand 3.8% this year and 3.2% next year. Uncertainty in industry and foreign trade remains high, due to persisting supply-side bottlenecks, surging commodity prices and worries about energy supplies. Thus, industry is likely to show mediocre growth in the next few quarters. However, the sector of services is likely to be among the main contributors to GDP growth this year, as both hard data and confidence indicators have been showing a solid performance. The deterioration of household consumption in 2022 might be more limited compared to real wage dynamics, partially thanks to the normalization of saving rates from their high pandemic levels and strong y/y growth in 1Q22.

Inflation spiraled into double-digits everywhere in CEE bar Slovenia, driven mainly by food, energy and housing, as the war in Ukraine exacerbated the existing supply-side pressures. The demand-side factors are also pro-inflationary. Several national governments have introduced anti-inflation measures which are expected to last for a while. We expect inflation rates to peak in 2Q or 3Q of this year, within 11-16% y/y in most countries. Overall, this year’s inflation may average 12.2% in the CEE8 region, before easing towards 6.8% in 2023 – still above central bank targets.

CEE central banks are trying to balance soaring inflation against an expected slowdown in economic activity in the quarters ahead. Skyrocketing inflation and worries about de-anchoring of inflation expectations have led them to continue with monetary tightening. Local key rates are already close to 6% in Czechia, Hungary and Poland, and there is more to come – especially in the latter two countries, whereas Czechia is nearing the end of its tightening cycle. Romania and Serbia will also deliver more rate hikes in the quarters to come, and even the ECB is finally jumping on the rate-hiking bandwagon.

PDF Download Download PDF (729kB)

General information

AuthorErste Group Research
Date2022/06/20
Languageen
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focusCEE
Currency in focus-
Sector in focus-
Download





Decline
Accept

We use cookies and web analysis software to give you the best possible experience on our website. If you consent, these tools will be used. For more details please read our Data protection policy.

INFORMATION FOR PRIVATE CLIENTS / CONSUMERS

Any information, material and services regarding financial instruments and securities provided by Erste Group Bank AG or any of its affiliates (collectively “Erste Group“) on this and any linked website hereafter (jointly the “Websites”) shall be exclusively to investors who are not subject to any legal sale or purchase restrictions (the “Interested Party“).

The publication and distribution of information as well as offering and selling of products and services described on the Websites is prohibited by law in some jurisdictions. For this reason, persons in countries in which the publication as well as the offering and selling of products and services described on the Websites are not permitted by law, must not enter the Websites and/or acquire the products displayed on the Websites.

Neither Erste Group nor any third party shall offer access to the Websites or offer the products to especially, but not limited to citizen/residents of the United States and “U.S. person” (as defined in Regulation S under the US Securities Act 1933 as amended). For this reason, the distribution or redistribution of the information, materials and products into United States or into any other jurisdiction where it is not permitted under the applicable law, as well as to the citizens/residents of these countries shall be prohibited. The securities displayed on the Websites have not been and will not be registered under the US Securities Act of 1933 and trading in the securities has not been approved for purposes of the US Commodities Exchange Act of 1936. For this reason the securities may, inter alia, not be offered, sold or delivered within the United States or, for the account and benefit of U.S. persons.

The Interested Party is solely responsible to examine, whether he may enter the Websites under the law applicable to it. Erste Group shall not be responsible for the distribution of content of any of the Websites to individuals or entities which provide false information about their right to enter the Websites. For this reason Erste Group shall not be liable for any legal claims or damages which may result from the unauthorized entering or reading of the Websites.

By agreeing to this hereto, the Interested Party confirms that
(i) It has read, understood and accepted this Information and the Disclaimer;
(ii) It informed itself about any possible legal restriction and warrants that it is not restricted or prohibited to enter the Websites according to any law applicable; and
(iii) It does not make available the contents of the Websites to any person who is not qualified by law to enter the Websites.