Top upside risks of this quarter:
- Further income tax reduction as indicated in the ZIURS may boost the spending of households and increase the optimism further.
- Lower geopolitical risk in Eastern Europe (some kind of armistice) could improve the consumer sentiment and improve access to reconstruction projects in Ukraine for the commercial (construction, engineering) sector.
- Resolution of Middle East shipping bottlenecks leading to rapid price declines in natural gas, electricity, and fertilizers.
- Sluggish demand in automotive, chemical, paper and pulp industry and steel parts on the non-EU markets and pressure from price-competitive imports to EU-27 and rising domestic labour costs.
- Rising commodity (aluminium, copper) and energy prices (gasoline, natural gas, electricity) increasing fiscal burdens and squeezing corporate margins.
- Conflicting policy signals between strict fiscal consolidation needs and broad-based tax cut proposals.
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