Research trip to Romania, Poland and the Czech Republic

This summer, a Portfolio Manager from the Emerging Markets Fixed Income team conducted a research trip to Romania, Poland and the Czech Republic to assess the current economic and political situation in these countries. Engaging with senior officials, including Romania’s President Nicușor Dan, we explored the impact of political developments on bond markets and exchange rates.

Romania: fiscal reforms help restore stability

Following political turbulence in early 2025, Romania has made significant progress in fiscal consolidation. A pro-EU coalition implemented key reforms such as increases in value-added tax and adjustments to the pension system. These measures have helped to restore access to capital markets and strengthen investor confidence. Romanian debt now offers attractive carry opportunities, although inflation and political uncertainty beyond 2026 remain important considerations.

Poland: deficits under pressure

Poland is expected to run the region’s largest fiscal deficit, driven by election-year spending and political dynamics. However, the banking sector remains in a strong position to finance fiscal deficits, and inflation is projected to stabilize. Debt dynamics and shifts in credit outlook will be key factors influencing hard currency bond performance.

Czech Republic: navigating change ahead of elections
The Czech Republic’s cautious fiscal stance may come under pressure as upcoming elections suggest gains for the populist ANO party. While institutional checks and balances remain intact, discussions around pension reform and EU policy may shape future market expectations. At the same time, evolving political narratives and softer export performance will influence the koruna’s trajectory.