This is despite a spike in core inflation. The three central banks of Central Europe (CE) are on a loosening cycle, responding aggressively to the COVID-19-induced collapse in growth while expecting the contraction to bring down core inflation rates later this year.
PMI surveys for Hungary, Poland and the Czech Republic show persistent expectations of contraction.
The Commission expects Czech GDP to contract this year by 7.75%, the pandemic disrupting foreign demand for export-oriented manufacturing.
Hungarian GDP is to shrink by 7% with labour market deterioration curbing household consumption and falling exports hurting the auto sector.
Contraction in Poland’s resilient and diversified economy by just 4.5% in 2020 is forecast to be the least-bad in the EU.
Hungary’s mixed record in handling of the crisis could put the ruling Fidesz party’s position at risk.
