14th April 2016

Moody's: Broadly stable credit outlook for CEE-8 sovereigns, but fiscal loosening and political shifts pose risks

Moody's CEE-8 outlook report focuses on the EU member states from Central and Eastern Europe: Czech Republic, Poland, Slovakia, Bulgaria, Romania, Slovenia, Hungary and Croatia.

"We expect the CEE-8 to post real GDP growth of slightly above 3% in 2016-17, outperforming the 2% EU average. As these countries' economies benefit from steadily increasing domestic demand which supports the growth outlook, debt levels will likely remain broadly stable at 53% of GDP," says Evan Wohlmann, an Assistant Vice President -- Analyst at Moody's.

According to Moody's, private consumption will be supported by significant improvements in labour market conditions and will benefit from lower oil prices given the CEE-8 are net energy importers.

The rating agency expects unemployment in the region to continue to fall in 2016-17 to below 7% for the first time since 2008. Unemployment in Croatia still remains relatively high, although it is likely to fall below 14% in 2017 from its peak of over 17% in 2013-14.

Read the press release.

Moody's Czech A1 rating was not under threat. Czech economic growth this year should be around 2.5 percent. The estimate is along the same lines at the Czech Ministry of Finance but slightly lower than the Czech National Bank, which sees growth this year at around 2.7 percent. Growth will be slightly higher, at just over 3 percent, in Poland, Slovakia, and Romania. The health of many local banks, such as ČSOB and Česká Spořitelna, is actually better than the parent company, Belgium’s KBC and Austria’s Erste Bank, according to Moody's, Radio Praha wrote.


Members of the American Chamber of Commerce in the Czech Republic