CEE & CCA week ahead: Hungarian and Czech growth, plus CCA rate decisions
The desk anticipates a complicated growth landscape for Hungary and the Czech Republic as they prepare to unveil key GDP estimates for Q3 next week. According to the commentary, Hungary's economy is expected to show robust annual growth despite pressures from agriculture, while the Czech Republic might indicate a slow down in economic momentum amid deteriorating confidence indexes. Per the full note , the expectation of ongoing growth in Hungary contrasts with the anticipated decline in the Czech Republic, which may inform trading strategies around the EUR/HUF and EUR/CZK pairs going forward.
What the desk is arguing
The desk views Hungary's upcoming GDP estimates as a positive signal, likely showing resilience driven by a robust service sector amidst challenges in agriculture. Per the recent commentary, the flash GDP estimate indicates an annual growth rate forecast remaining at 1.9%. This outlook positions Hungary favorably against ongoing regional economic pressures, particularly within the CEE framework.
In contrast, the Czech Republic faces a potential weakening of economic performance, with anticipated declines in business and consumer confidence due to rising prices and tighter monetary dynamics. While quarterly growth is expected to bounce back due to pre-stocking effects driven by external geopolitical tensions, the potential for a decline in sentiment could diminish asset appeal.
Where it sits in our coverage
Currently, our consensus target for EUR/HUF is set at 1.075, with a range of 1.04 to 1.12. Notable firm targets include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
Our outlook for Hungary aligns with jpmorgan while diverging from bofa, which posits a more conservative estimate, falling on the lower end of our spread. This suggests a potential trading opportunity as the market adjusts to these regional economic forecasts.
How other firms see it
Alignments in sentiment are noted among firms like jpmorgan, indicating a continued bullish stance on Hungary's economic potential, while bofa poses a more cautious outlook regarding the Czech economy. This divergence underscores the need for traders to pay attention to the regional dynamics shaping these estimates.
Key indicators that may influence cross-pair movements include the upcoming GDP releases and central bank rate decisions, particularly reflected through EUR/HUF and EUR/CZK dynamics that may trade off the anticipated outcomes of these reports.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Hungary expected to show robust annual growth at 1.9% despite sector-specific challenges.
- 02Czech confidence indicators may weaken in October amid rising prices and tighter monetary policy.
- 03Market dynamics suggest potential trading opportunities based on diverging GDP forecasts.
- 04The upcoming GDP releases are crucial event risks for the currencies involved.
Market implications
Traders should monitor the EUR/HUF and EUR/CZK pairs closely, with potential volatility around the GDP data release next Friday. The desk positions itself for the possibility of a stronger HUF against the EUR, particularly if positive growth data for Hungary contrasts sharply with Czech weakness.
Risks to this view
Any unexpected deterioration in Hungary's growth or significantly worse than anticipated confidence data from the Czech Republic would raise risks to this outlook. Additionally, external geopolitical shocks that alter market sentiment could rapidly shift the dynamics.
Articles CEE & CCA week ahead: Hungarian and Czech growth, plus CCA rate decisions Published 11:35 Czech Republic Hungary Share X LinkedIn E-mail Copy link Share X LinkedIn E-mail Copy link Download Hungary and the Czech Republic will release third-quarter GDP estimates next week, while Uzbekistan and Azerbaijan announce their latest monetary policy decisions Peter Virovacz , David Havrlant and Dmitry Dolgin Hungary's growth picture remains mixed Hungary: Flash GDP to provide first look at third-quarter growth Friday brings the release of the preliminary Q3 GDP estimate. We expect agriculture to have weighed heavily on growth in the third quarter, but industry – mostly driven by the new export capacities – should largely offset this. Services will remain a major positive contributor.
As this is only a flash estimate, the data will provide few details. Even so, annual growth should remain robust despite the quarterly slowdown. We therefore maintain our full-year growth forecast of 1.9% and continue to expect growth to pick up in the final quarter of the year.
Czech Republic: Confidence likely to weaken as growth softens Monday brings the release of October confidence indicators, and on Friday we'll get the preliminary 3Q26 GDP estimate. We expect economic performance to have weakened further on an annual basis in 3Q26, but quarter-on-quarter growth should have picked up thanks to a pre-stocking effect triggered by the Hormuz conflict. Large numbers of people submitted new orders when it became clear that prices would rise and products would become more scarce.
That said, we assume this positive effect will fade at the year's turn. Both business and consumer confidence likely deteriorated in October, reflecting rising prices, the bond-market selloff, the propensity for tighter monetary policy, and the crisis in France. CCA: Uzbekistan and Azerbaijan central banks expected to stay on hold Wednesday brings the Central Bank of Uzbekistan's latest interest rate decision.
We expect the CBRU to keep the policy rate unchanged at 14.00%, although a 50bp cut remains a close alternative. A hold appears appropriate given an increasingly pro-inflationary and hawkish global backdrop, some recent weakening in the soum and still-strong domestic demand. At the same time, the case for easing continues to build, as core inflation has recently stabilised at 5.5% YoY, not far above the 5% target, real interest rates remain high, and domestic bank funding continues to materially outperform lending growth, pointing to restrictive monetary conditions.
We therefore see a hold as a tactical pause before gradual easing in the medium term. The Central Bank of Azerbaijan announces its latest interest rate decision on Thursday. We expect the CBA to keep the refinancing rate unchanged at 6.50%, as inflation remains within the 4±2% target range.
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