Labor productivity rising everywhere but Czechia

On the radar

• In Slovakia, Ivan Korcok got 42.5% of the votes in the first round of presidential elections and Peter Pellegrini received 37% of votes. Second round is scheduled for April 6th.

• Moody’s affirmed Poland’s rating at A2 and stable outlook.

• In Poland, February’s unemployment rate will be published at 10 AM CET.

• At noon CET, January’s real wage growth will be released in Serbia.

Economic developments

Labor productivity (per hour worked, seasonally adjusted data) compared to the pre-pandemic levels increased in all countries but Czechia. In 2023 the labor productivity index (2019=100) was marginally lower in Czechia, while in other CEE countries it increased, ranging from 102 in Poland and Slovenia and as much as 109 in Croatia. Furthermore, in Czechia labor productivity has been continuously declining over last two year and it is the only country in the region where productivity per hour worked declined in each and every quarter starting from 4Q21. In other countries, the growth dynamics over last two years has been rather meager as well, but not necessarily negative. More importantly, in most of them, there are signs of labor productivity picking up in the last quarter of 2023. Romania seems to follow a different pattern where labor productivity growth fell to 0.7% y/y in the 4Q23 from around 4% seen in the previous quarters.

Market movements

Slovakia hold the first round of presidential elections on Saturday. The winner, Ivan Korcok, came as a surprise, as he was placed second in pre-election polls with a significant gap. Therefore, Ivan Korcok (42.5% of the votes), a diplomat and former Minister of Foreign Affairs, and Peter Pellegrini (37%), a former Prime Minister and the current Speaker of Parliament will run for the President in the second round scheduled for April 6th. Moody’s affirmed Poland’s rating at A2 and stable outlook underlying very strong economic strength and positive impact of unlocking EU funds. Last week, yields on major markets stagnated or edged downward. LCY government bond yield curves in Czechia, Hungary and Poland shifted up slightly last week. On the FX market, the EURCZK moved back closer to 25.40, the EURHUF was as high as 397 on Friday, while the EURPLN was at 4.31. This week, on Tuesday, Hungarian central bank holds a rate setting meeting and higher EURHUF levels support the 75 basis points cut scenario.

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