Inflation in Czechia arrived at 2.7% y/y for July.
Retail sales in Romania were released at 2.5% y/y.
At 8:30, Hungary will release industrial production and retail sales figures for June.
At 9:00, Slovakia will publish June’s retail sales.
Today, Czechia will also release industrial production and trade data.
Economic developments
Long-term investment in research and development is an important driver of economic success, as demonstrated by countries such as South Korea, Taiwan, and the United States. A significant portion of R&D funding originates from public sources, which is today’s topic. In 2024, Slovenia recorded the highest government budget allocation for R&D among the CEE countries, reaching nearly 0.9% of GDP; representing a 100% increase over the past decade. However, no other CEE country was over the EU average. Croatia allocated 0.6% of GDP, followed by Czechia at 0.5%, while Romania reported the lowest level of public R&D investment at just 0.1% of GDP. For comparison, the leading countries in 2024 were Germany, Iceland, and Austria, each allocating approximately 1% of GDP to government-funded R&D. Outside of Europe, Japan and South Korea reported even higher figures in 2023, at 1.7% and 1.27% of GDP, respectively, although data for 2024 are not yet available. Another interesting metric is R&D expenditure per capita. Switzerland leads in this category, with spending of €900 per person, followed by Iceland (€831) and Luxembourg (€760). Within the CEE region, Slovenia again stands out with the highest per capita expenditure at €275, while other countries in the region remained below €150 per capita.
Market developments
The situation in FX markets has stabilized, and investors are now awaiting President Trump’s nomination for the vacant Fed Governor position—widely expected to also be the likely successor to current Fed Chair Jerome Powell. Yesterday’s flash estimate of Czech inflation came in line with market expectations, reinforcing the view that the CNB will leave interest rates unchanged at tomorrow’s meeting. This MPC meeting will be particularly notable, as the CNB will also unveil a new forecast—the first under the leadership of the new Director of the Monetary Section.