Outlook for industry in CEE is not improving

The beginning of the year was rather weak for the industry sector across CEE. In all countries, apart from Czechia and Croatia, the average growth in January and February of 2025 was in the red. Compared to industry performance in 2024, the growth is slightly stronger not only in Czechia and Croatia but also in Romania and Serbia. Croatia clearly overperformed. In Poland, Slovakia and Serbia, we saw industry expanding in 2024 while in the first two months of 2025 industrial output growth declined. In Hungary, contraction of the sector continues and has unfortunately been even more extensive. In the first two months of this year industrial production was 6.4% lower than in the same period of 2024. The outlook remains hazy for the whole region. We have seen some improvement of the sentiment lately (for example Polands PMI Index above the threshold of 50) but the tariff war between the US and other countries could hamper manufacturing sentiment in the coming months. Further, positive effects from increased defense and infrastructure spending in Germany or cyclical rebound of that economy will be offset by new barriers for international trade.