Sentiment indicators send mixed signals

Sentiment indicators have been sending mixed signals about economic recovery most recently. Manufacturing PMI indices went up in Czechia and Poland in January, while in Hungary and Romania they dropped compared to December. Czechia reported slower falls in output and new orders in January. Poland also experienced slower deterioration in business conditions and improving confidence in the outlook for production. In Romania, on the other hand, production volumes fell at quickest rate on record. The Economic Sentiment Indicators (ESI) across the region suggest more pessimistic development as ESI declined in all CEE countries. Most notably in Slovakia and Serbia. Currently, the average value of ESI indicator for the region is as low as it was at the end of 2023. More worryingly, the downward trend has been present for couple of months already. We keep seeing weak external environment as a key risk to the downside to our current growth forecasts in CEE.