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“Alongside growth, another key theme in our outlook is around the institutional frictions that continue to weigh on policymaking. Reform momentum remains vulnerable to institutional frictions in Poland, political polarisation in Romania and fragmentation in Slovakia,” said Jakob Suwalski, an executive director in Scope’s sovereign and public sector team.

“Meanwhile, persistent uncertainty around the unfreezing of EU funds in Hungary continues to weigh on investment prospects and external resilience. Upcoming electoral cycles and shifting coalitions across the region may alter fiscal trajectories and delay structural reforms, reinforcing governance-related rating risks.”

CEE sovereigns enter 2026 with elevated structural challenges, including fiscal pressures, demographic headwinds and persistent external vulnerabilities. The growth and external resilience story is supported by ample allocation of EU funds, but the approaching Recovery and Resilience Facility deadline does raise absorption risks, exposing countries with administrative bottlenecks, including Hungary, Bulgaria and Romania.

“External headwinds also remain. Soft demand from Germany and core EU markets will weigh on the export-oriented economies of the Czech Republic, Slovakia and Hungary,” Suwalski said.
Trade policy shocks and dependence on energy imports add external pressures to economies with higher risk profiles, such as Romania (structural current account deficits), Hungary (energy import dependence, reliance on foreign capital, unresolved EU-fund issues), and Slovakia (highly concentrated export base).

From an industry perspective, high sector concentrations, notably in the automotive industries of Slovakia, Czech Republic and Hungary, heighten exposure to tariff risks, uncertainties around EV transition and supply-chain shocks. Meanwhile, tourism-reliant economies (Croatia and Türkiye in particular) face cyclical and climate-related vulnerabilities, while persistent productivity gaps and green-transition pressures weigh on cost competitiveness.

“On the topic of fiscal deficits and rising debt levels, the most pronounced challenges are in Poland, Slovakia, Romania and Hungary, given widening structural gaps and significant spending pressures,” Suwalski noted. “Even sovereigns with stronger fiscal fundamentals (Baltics, Czech Republic, Croatia) face rising demands from defence, ageing and softer revenue growth. Under-delivering on consolidation plans would increase downward rating pressure.”

Scope’s CEE sovereign rating portfolio

Scope has upgraded three CEE sovereigns (Lithuania, Slovenia, and Bulgaria) in 2025 and changed one outlook to Positive (Croatia, supported by sustained reform momentum and euro-area integration benefits). Positive momentum from EU-funded investments, progress on reforms and external rebalancing supports selective ratings upside, while downside pressures stem from structural fiscal strain, governance challenges, and insufficient reform momentum.

Slovakia and Georgia currently have Negative Outlooks, reflecting fiscal and governance-related pressures. The overall balance of CEE sovereign Outlooks remains mildly negative, signaling continued divergence in credit trajectories across the region.