MACROscope

Based on the currently available data, we can say that the economic scenario that materialized in 2024 was close to the one we sketched out a year ago. Despite the unfavourable external environment and the protracted downturn in the euro area, the domestic economy returned to GDP growth of around . 3%, mainly due to robust domestic demand, including consumption, supported by rapidly rising household incomes. The results for the third quarter were a big disappointment, but we consider them a temporary disruption of the trend, not a signal of its fundamental change. We are still not able to explain exactly what was behind the sudden slump in demand in 3Q, but we do not share the opinion about the "death of the consumer" (if anything, it was only resting) and in the coming quarters we expect the pace of economic growth to return above 3%, with further significant contribution from domestic consumption.  (...)

The return of Donald Trump to the Oval Office with the Republicans simultaneously taking over the Senate and retaining control of the House of Representatives signals major changes to the world economy and geopolitics. What these changes will exactly entail is hard to foresee, as one of the trademarks of the president-elect is his unpredictability. However, given his earlier statements, the initial reaction of the financial markets to his victory seems to have been rational, as the dollar strengthened against the euro, emerging market currencies – especially the Mexican peso and the CEE currencies – depreciated, the yields on US Treasuries rose, and the yields on German bunds fell. The size of these initial responses was, however, limited which suggests that market participants remain unsure as to what the actual policies of the new administration will be (...)