Flash estimates indicate that real GDP growth in the group of 11 EU members in the CEE region retained momentum in Q1, coming in at around +4% y/y, the same as in Q4 2018. Looking at seasonally adjusted, y/y real GDP growth, there were some upside surprises, notably among large automotive producers. Hungary became the frontrunner in Q1 with +5.2% (5% in Q4), followed by Romania with +5.1% (sharp acceleration from +4% in Q4), Poland with +4.6% and Slovakia with +3.8% (both unchanged). Only Czechia, also a large auto producer, posted a more modest +2.5% growth in Q1, and the country’s weakened manufacturing PMI (46.6 in April) points to a soft Q2 as well. Meanwhile, Q1 growth remained also robust in Bulgaria (+3.4%) and Lithuania (+3.8%) but weakened markedly in Latvia (+3%, after +5.3% in Q4). The Q1 estimates pose some upside risk to our current average full-year 2019 growth forecast of +3.4% for the 11 EU members in CEE (after +4.3% in 2018). On the other hand, ongoing political risks including Brexit and global trade tensions pose downside risks.
