Households are ready to start saving

June 5, 2024

On the radar

  • Trade balance in Slovenia arrived at EUR 0.15billion in April, while in Hungary the surplus reached EUR 1.76 billion.

  • In Czechia, retail sales growth (excluding automotive) landed at 5.3% y/y in April.

  • Today, we expect Polish central bank to keep the policy rate unchanged at 5.75%.

  • Hungarian central bank releases the minutes in the afternoon.

Economic developments

In several CEE countries that have already published their 1Q24 GDP structure, private consumption has contributed positively to the growth at the beginning of the year. It should come as no surprise that the purchasing power of households has improved with substantial disinflation and the ongoing dynamic growth of nominal wages. We see private consumption as a key driver of growth in 2024. At the same time, however, households plan to improve their savings. They perceive the probability of an increase in savings over the next 12 months to be high. In fact, their willingness to save is at the highest level in the region since 2008. Such behavior is likely to moderate consumption growth in the coming quarters.

Market movements

The Polish central bank will announce the rate decision this afternoon, and we expect the policy rate to remain unchanged at 5.75%. At the beginning of the year, inflation fell toward the target, but it is expected to increase in the second half of the year, holding off monetary easing at this point. The meeting in July is expected to be more interesting as new inflation and growth projections will be published. The Hungarian central bank will release the minutes from the meeting at 2 PM CET. The CEE currencies have weakened against the euro since the beginning of the week. The EURCZK is at 24.71, EURHUF went above 390, and EURPLN returned to 4.30. The long-term yields have been moving down this week. Serbia is going to tap the international bond market with the issuance of USD denominated bonds in the amount of 1.5 million.

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