Commerzbank said purchasing managers’ indices (PMIs) in Poland, the Czech Republic and Hungary had been improving, with support from earlier signs of recovery in Germany. It added that these readings had pointed to a possible upswing in Central and Eastern Europe (CEE).

The bank described the Czech PMI as consistently reliable and free from noise, while calling the Hungarian PMI the most volatile and unreliable. It said the Czech PMI surprised to the upside in March and showed a clear improvement trend over recent months.

Commerzbank reported the Polish PMI showed early steps towards reversing previous declines and moved closer to the 50 mark. It said these PMI moves had matched indications of improvement in the German economy earlier this year.

The bank said the context changed due to the Iran war and an energy price shock. It stated that the shock is likely to worsen real economies in the region, as Germany is also exposed to higher energy costs.

Commerzbank said earlier PMI-based optimism is now outdated unless geopolitical tensions ease soon. The article noted it was produced with the help of an artificial intelligence tool and reviewed by an editor.

Last year, we saw a promising trend develop as Czech and Polish manufacturing PMIs showed clear signs of improvement. This optimism was built on the idea that a recovering German economy would pull the entire Central and Eastern European bloc upward. That entire outlook became outdated overnight due to the energy price shock stemming from the conflict in Iran.

The shock in 2025 sent Brent crude oil prices spiking above $150 a barrel for a period, tipping the energy-sensitive German and CEE economies into a mild technical recession by the fourth quarter of last year. We saw regional currencies like the Polish zloty weaken significantly, trading past 4.90 to the euro as inflation surged above 8%. This erased the purchasing power that was meant to fuel the recovery.

Now, with the geopolitical situation showing signs of de-escalation and oil prices settling near a more manageable $85 a barrel, the original optimistic thesis is re-emerging. The latest March 2026 manufacturing PMI data confirms this, with the Czech index climbing to 51.2, its first move into expansionary territory since before the shock. This suggests the underlying economic momentum we saw in early 2025 was merely delayed, not destroyed.

For traders, the implied volatility in CEE currency options, particularly for the zloty and koruna, remains elevated from last year’s turmoil. This presents an opportunity to sell premium through strategies like short strangles on pairs like EUR/PLN, betting that the worst of the volatility is behind us. The risk is a sudden flare-up in geopolitical tensions, but current stability makes this an attractive yield-generating trade.

Furthermore, with regional inflation now cooling to around 4.5%, central banks are shifting their tone from the aggressive hawkishness of 2025 to signaling potential rate cuts in the third quarter. This creates a clear opportunity to use interest rate swaps to position for falling rates over the next six to nine months. It also suggests buying CEE currencies like the Czech koruna on dips, as the prospect of recovery could attract renewed capital inflows.

The region’s equity markets, such as Poland’s WIG20 index, are still trading below their early 2025 highs, having not fully recovered from the shock. As confidence returns, long-dated call options on these indices offer a capital-efficient method to gain upside exposure. This allows us to participate in the delayed economic upswing that the early PMI data originally hinted at over a year ago.