Since the COVID-19 pandemic, economic growth in the Central European region has been driven by generous fiscal policies. The Slovak government also supported households in maintaining consumption growth by increasing spending. The result was a sharp increase in public debt.
Fiscal consolidation, especially in the form of tax increases, is therefore an obstacle to domestic consumption, on which the economies of Poland, the Czech Republic, Hungary, Romania and Slovakia have relied in recent years.
External factors, such as American protectionism and trade tariffs, Russia's aggression towards Ukraine and increased requirements for defense spending, China's geopolitical assertiveness and its desire to increase its share in international trade, are undoubtedly working to the detriment of European economies. These are – and will be in the near future – the main factors inhibiting economic growth.
Tomas Dvorak, an economist at the British analytical company Oxford Economics, forecasts that in 2026, Central and Eastern Europe will experience solid growth of 2.7%. This is more by 0.3 points. percent compared to 2025.
— Poland will continue its impressive growth. The Czech economy will take second place, but far behind it. GDP growth in Hungary, Romania and Slovakia will not exceed 2%. – Dvorak predicts.
A common challenge
The expert also predicts that in 2026, strong domestic demand will remain in Central European countries [suma wszystkich wydatków na dobra i usługi na terenie danego kraju]what he thinks will be the most important trend in the coming months.
Consumer behavior will be influenced by three main factors: slower wage growth due to rising unemployment, inflation, which is still not completely under control in Slovakia (and Romania), and fiscal consolidation [polityka gospodarcza zakładająca zmniejszenie deficytu budżetowego i długu publicznego w celu poprawy stanu finansów publicznych].
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— The common challenge of Central and Eastern European countries is that they have deficits that are unsustainable and require significant and credible consolidation. But this is a difficult task given the need to finance increased security spending, the energy transition and an aging population, says Dvorak.
Therefore, the analyst expects that in the case of Slovakia, the deficit will decrease by 0.5 percentage points, and higher taxes will be the basis for consolidation. In addition, the government will stick to expensive military priorities, such as extensive energy price subsidies.
For comparison, the Council for Fiscal Responsibility also expects Slovakia's deficit to decrease by 0.5 percentage points, to 4.1%. GDP, while the Ministry of Finance announces a decline by 0.9 percentage points.
Continued dependence on Germany
The economies of Central and Eastern European countries are based on the dominance of the manufacturing sector. Despite the ongoing mild restructuring, this will not change in the near future. The latest data indicate that 2026 may be the beginning of the revival of factories in this region.
— Exports in 2025 ultimately exceeded expectations, thanks to preparations for the introduction of US tariffs, but also thanks to the diversification of export goods and destinations, which makes the region less dependent on Germany, Dvorak notes.
However, he argues that Central and Eastern European countries will benefit from the stimulus package announced by Germany thanks to strong ties with Europe's largest economy.
I’m Ashley Davis as an editor, I’m committed to upholding the highest standards of integrity and accuracy in every piece we publish. My work is driven by curiosity, a passion for truth, and a belief that journalism plays a crucial role in shaping public discourse. I strive to tell stories that not only inform but also inspire action and conversation.
