Economic expectations for the CEE region further stabilise

ZEW-Erste Group Bank Sentiment Indicator for Central and Eastern Europe (CEE)

(PresseBox) ( Mannheim, )
The economic outlook for Central and Eastern Europe (CEE) has further stabilised in March. The CEE sentiment indicator, which is calculated as the balance of negative and positive assessments with regard to the expected economic development on a six month horizon, increases marginally by 0.6 points in the current survey reaching minus 32.7 points. The steep rise of the previous months has slowed down and a majority of the questioned financial experts now consider an unchanged business cycle within the coming six months to be most probable for the CEE region. The CEE sentiment indicator is calculated monthly by the Centre for European Economic Research (ZEW), Mannheim, supported by the Erste Group Bank AG, Vienna.

With respect to the economic expectations for Austria, the slightly improved mood of the survey participants can be Press Release perceived, as well. In spite of still being negative (minus 18.7 points), the associated indicator gains 5.3 points.

The economic expectations for the Eurozone have improved in March for the first time after months of downward movements. The respective indicator rises markedly by 21.1 points to minus 25.1 points.

The balance illustrating the assessment of the present economic situation in the CEE region increases marginally by 0.7 points, closing at minus 57.4 points. The corresponding indicator for Austria recedes by 2.8 to minus 35.5 points. Still, the majority of the financial experts, namely 52.1 percent, regard the current conditions as acceptable. By opposition, the analysts' assessment of the present economic circumstances in the Eurozone remains very critical, despite its hike of 9.7 to minus 64.8 points this month.

The shift of the experts' expectations from falling to constant inflation rates with respect to the CEE region and the Eurozone continues in the March survey.

According to the respondents, the prospects of the stock market indices for Central and Eastern Europe (NTX) and Austria (ATX) as well as for the Eurostoxx 50 have clearly improved in March compared to the previous month. While all three balances gain in value, the evaluation on the Eurostoxx 50 notes the sharpest rise, increasing by 29.4 points.

Although the economic outlook for the CEE region as a whole has improved in March, the countries of Central and Eastern Europe are not to be regarded as a homogeneous group, since some of the countries are characterised by better perspectives for the second half of 2009 than others.


In spite of the analysts' business outlook for Croatia having worsened slightly in March, the respective indicator achieves the best value in the country comparison now standing at minus 14.9 points. The majority of the experts take a critical stance at the current economic situation in Croatia and the associated balance recedes by 7.8 to minus 50.0 points. As to the Croatian currency, most respondents anticipate depreciation. Closing at minus 13.9 points, the associated indicator is the only one which is located in the negative range.


The sentiment indicator for Poland improves by 5.0 to minus 23.2 points in the current survey. Thus, Poland belongs to the CEE countries, to which relatively bright chances of recovery for the second half of 2009 are attributed by the financial experts. With regard to the present economic conditions, the respondents' assessment is predominantly negative. Nonetheless, the corresponding indicator gains 2.6 to minus 28.8 points, reaching the best value in this category. Concerning the development of the Polish currency, the financial experts are more optimistic, too, expecting, by majority, an appreciation of the Zloty on a six month horizon.


Despite its hike of 2.0 to minus 37.6 points in March, the indicator capturing the business forecast for Romania still features the lowest value among the analysed economies.

The balance for the current economic situation increases slightly, as well, remaining highly negative (minus 59.7 points), however. It seems that the analysts cannot appraise yet, whether the Romanian government and the EU or respectively the IMF will agree upon the requested financial aid and, if applicable, which impact for the country the economic stimulus package might have.


The economic expectations for Slovakia improve by 6.4 to currently minus 29.4 points. The respondents' assessment on the present economic conditions worsens by 10.2 to minus 35.2 points. Nonetheless, Slovakia features the largest share of financial experts (23.6 percent) considering the current economic situation to be good.

Czech Republic

The cyclical indicator for the Czech Republic rises 6.2 to minus 25.9 points and the evaluation of the present economic situation ameliorates by 3.6 to minus 40.4 points. Compared to the results for all other analysed countries, the Czech currency is most likely to appreciate versus the Euro, according to the survey participants. The corresponding balance jumps 51.0 to 45.1 points in March.


The financial experts' forecast with regard to the business trend in Hungary improves slightly by 2.5 to minus 20.7 points within the current survey. However, a distinct majority of the analysts, namely 70.6 percent, judge the present economic situation as bad. The respective indicator loses 6.3 points, reaching the lowest value among all analysed countries (minus 68.7 points).

The special question in March deals with the dependency of the CEE region on Russian energy resources. 42 percent of all survey participants attach high importance and 23 percent even very high importance to the reduction of the energy dependency. According to their opinion, negotiations with Russia at the level of CEE governments as well as of the European Union are reasonable instruments in this regard. In contrast, the majority of the participants assess the impact of the US government in this matter as low. With respect to potential measures, the financial experts particularly recommend creating a "southern corridor" for the supply of gas from Caspian and Middle Eastern sources. Furthermore, most of the analysts evaluate possible incentives for reduction of the energy consumption and for the use of renewable energy also as reasonable.

Survey Procedure and Methodology

The Financial Market Survey CEE is a survey carried out by ZEW Mannheim and the Erste Group Bank AG Vienna, among financial market experts and has been conducted monthly since May 2007. The target of this survey is to develop indicators describing the economic conditions in Central and Eastern Europe (CEE) as well as in Austria. The CEE region observed in the survey consists of Bulgaria, Croatia, the Czech Republic, Hungary, Poland, Romania, Serbia, Slovakia and Slovenia.

The financial experts are questioned on their evaluations of the current business situation, the medium-term prospects of the respective economies and their expectations as to the development of the inflation rate, the short- and long-term interest rates, the exchange rates and share prices on a six month time horizon.

The analysts' assessments reflect the qualitative direction of the estimated changes.

Among the analysed economies are the CEE region, the Eurozone as well as the Czech Republic, Poland, Hungary, Slovakia, Croatia, Romania and Austria.

The monthly 'Financial Market Report CEE'

contains the results for every Central and Eastern European country in detail.
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