Central Europe’s 2026 Economic Outlook: Still on the Bright Side, Politics Aside

Economic outlook for 2026 has broadly improved for the three economies of the CE3 region. In addition, the regional disparities observed in the past two years should decline thanks to robust growth perspectives in Poland and Czech Republic coupled to a gradual recovery in Hungary with an upside potential depending on the April 2026 elections outcome (with possible unlocking of the suspended EU funds). While domestic demand, and consumer spending, in particular, should remain the main driver of growth in the years to come, thanks to dynamic wages in all three countries, its relative contribution to growth might go down somewhat. Indeed, while nominal wages are expected to keep decelerating, other growth engines like investment, induced by faster absorption of the EU funds in Poland and Czechia, or by their potential unfreezing in Hungary, should boost public investment along with the recovery in residential construction, already seen this year. Meanwhile, we expect the net exports to remain a drag on growth due to stronger rise in imports, and despite the rebound in exports related to stronger external demand, notably from Germany (thanks to the fiscal expansion and higher defence spending). On the downside, we note the end of the disinflation ary process in most of the region. Inflation should remain sticky in Hungary, forcing the central bank to keep its interest rate unchanged for at least two more quarters, while additional pressures, notably stemming from the food sector, might arise in Poland and Czechia pushing them either to remain in a longer status quo or to end the rate cutting cycle in Q1 2026. Overall , the region’s economic outlook appears positive , though uncertainty lingers over regulated prices as the governments , particularly in Czech Republic , promise additional measures to curb energy prices. In addition, potential fiscal slippage remains a significant risk in Hungary and Poland, while Czechia has more leeway after the latest round of fiscal consolidation in 2024.