Low EU-funded investments likely to keep slow pace of growth in CEE region

Third quarter GDP growth numbers from the CEE region are scheduled for release this week and the slow pace of EU fund inflows is likely to weigh on growth numbers in many countries. High-frequency indicators show a mixed picture across CEE countries.

"The pace of expansion likely slowed in many countries, particularly in Poland (where we see annual growth of 2.8 percent y/y in 3Q16) and Hungary (1.7 percent). On a positive note, we definitely see improving economic conditions in Croatia and Serbia, for which we recently have revised growth figures upwards," said Erste Group in a research note.

The recent European Commission autumn forecasts private consumption continuing to fuel GDP growth, additionally supported in the following quarters by the rebounding investment performance (as a new EU funding period kicks off). Domestic demand is likely to play a key role while external trade dynamics pose continuous risks to growth.

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