Central & Eastern Europe: Some positive growth surprises

3 min
Manfred Stamer
Manfred Stamer Senior Economist for Emerging Europe and the Middle East

Flash estimates indicate that real GDP growth in the group of 11 EU members in the CEE region retained momentum in Q1, coming in at around +4% y/y, the same as in Q4 2018. Looking at seasonally adjusted, y/y real GDP growth, there were some upside surprises, notably among large automotive producers. Hungary became the frontrunner in Q1 with +5.2% (5% in Q4), followed by Romania with +5.1% (sharp acceleration from +4% in Q4), Poland with +4.6% and Slovakia with +3.8% (both unchanged). Only Czechia, also a large auto producer, posted a more modest +2.5% growth in Q1, and the country’s weakened manufacturing PMI (46.6 in April) points to a soft Q2 as well. Meanwhile, Q1 growth remained also robust in Bulgaria (+3.4%) and Lithuania (+3.8%) but weakened markedly in Latvia (+3%, after +5.3% in Q4). The Q1 estimates pose some upside risk to our current average full-year 2019 growth forecast of +3.4% for the 11 EU members in CEE (after +4.3% in 2018). On the other hand, ongoing political risks including Brexit and global trade tensions pose downside risks.