The economies of Central and Eastern Europe (CEE) shrugged off ongoing troubles in the euro-zone economy for most of 2019 but the latest data offer evidence that this now taking a bigger toll. Industrial production growth in Poland and the Czech Republic has weakened significantly after holding up well at the start of the year and in Slovakia, weakness in manufacturing is spreading to the services sector. Strong domestic demand has so far shielded Hungary from external headwinds but business confidence is now falling sharply and exports are faltering. We expect GDP growth across CEE to slow further over the coming quarters. But in most places, above-target inflation is likely to prevent monetary easing.
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