Economic growth in the European Union’s eastern wing probably slowed in the last quarter of 2018 as output was affected by slowing demand for the region’s exports.
Of the six countries releasing fourth-quarter gross domestic product data this week, Bulgaria, Hungary, Poland and Slovakia are set to report slower expansions, according to economists. Output in Romania and the Czech Republic was probably unchanged. Still, even the reading for the last, which is the laggard in the group, will be double the pace in the euro area, which is seen expanding 1.2 percent.
Growth in the region, which has become an important hub supplying manufacturers in the euro zone, is past its peak, as the global downturn is affecting export-oriented economies.
The slowdown may undermine arguments for more monetary tightening, as evidenced by the last week’s decision to keep interest rates on hold in the Czech Republic, Poland and Romania. But it is being accompanied by faster inflation—Czech January core price growth was the highest in at least a decade—which may give policy makers room to raise interest rates.