A Small Quarterly Projection Model for a Selected Group of CEE Economies

The monetary policy decision process is fundamental to achieving price stability and sustainable economic growth over the medium term. In recent years, given the multitude of unprecedented shocks that hit the global economy, many complex models still need to estimate accurately the magnitude of these shocks and their impact on economic activity. This paper proposes a small quarterly projection model to assess the economic outlook for a selected group of Central Eastern European countries with similar economic characteristics. Therefore, we present a comparable analysis between Hungary, Poland and Romania for 2005Q4-2023Q4. Our results suggest a relatively good performance regarding the assessment of the economic downturn from 2020 and a similar recovery pattern in Hungary and Poland, while the recovery in Romania was only partial. A real-time forecasting exercise ensures that the trajectory of macroeconomic indicators is close to the actual data, especially during regular times.