On course to recovery

Each country’s government in our Gleeds Central Eastern European region has approached 2023 challenges differently — some more aggressively than others — and the results are in.

Romania and Slovakia experienced gross domestic product (GDP) growth in 2Q 2023, whereas Czechia, Hungary and Poland all retracted in their most recent YoY growth figures. The latter three countries started the year with the highest consumer price indexes (Eurostat HICP) and have faced more challenging recoveries. Nonetheless, all three have achieved over a 50% drop in inflation.

Construction confidence has fluctuated, with some hints of improvements quickly replaced by declines. Slovakia managed to maintain positive work expectations until September of this year when this factor turned negative. Romania had similar results, also keeping positive work expectations until September. On the other hand, Poland has seen improvements in its general construction business climate indicator for large enterprises (+250 employees) thanks to their current and expected economic situations.

It is impossible to generalise the region, thus requiring more detailed analysis — what drives these results? Is it government policies, is it macro-economic factors, or something else? As winter approaches and gas supply levels start to play their role in industrial pricing, the end of the year may change the direction of short-term recovery. Still, the forecasts are staying put — each country will have positive GDP growth in 2024 and inflation will stay on its downward course.

The construction production index (seasonally and calendar adjusted), as reported by Eurostat, shows that Poland (18.3) and Romania (26.1) experienced YoY growth and even Czechia (1.9) and Slovakia (3.9) saw small improvements. Although these countries are taking different paths, they are all headed in the same direction — recovery and, in some cases, even construction growth.