Adverse demographic trends
For several years, Central Europe has been facing a marked demographic decline. Its magnitude varies from one country to another (see Chart 1). The total population decline from 2004 to 2025 ranges from -0.3% in Slovakia to -17.2% in Bulgaria. The Czech Republic is the only country in the region to have seen a population increase over the same period. The working-age population (ages 15–64) is also declining. However, the situation is less unfavourable in Hungary, Poland, the Czech Republic and Slovakia, while Romania and Bulgaria are experiencing a more significant decline due to migration patterns. Net migration flows were negative for Bulgaria until 2019 and for Romania until 2021. However, this trend has reversed in recent years. Recently, the arrival of Ukrainian refugees has eased the pressure on the working-age population, especially in Poland and the Czech Republic. Ukrainian refugees now account for around 5% of the workforce in Poland.
Medium-term concerns
By 2030, demographic trends are expected to deteriorate further, raising concerns about potential upward wage pressures, a loss of competitiveness and a structural weakening of potential growth.
Additional assets to underpin growth
Despite demographic headwinds, the economies of Central Europe have fared rather well so far, primarily due to several key factors:
1) The influx of EU funds (approximately EUR 430 billion between 2004 and 2024, or 20% of GDP). Support from EU funds is expected to continue, and these countries will remain net beneficiaries in the medium term.
2) Over the past two decades, productivity growth has outpaced wage costs. This has enabled Central European countries to gain market share in Germany (see Chart 2), as well as to achieve notable economic convergence with developed economies.
3) A skilled workforce (secondary and higher education graduates account for around 90% of total employment).
Certain strategic sectors, such as electric mobility, AI and defence, are projected to continue attracting foreign direct investment. Hungary and Poland aim to become regional powerhouses in electric mobility, particularly through the production of batteries for electric vehicles. When it comes to AI, Central European countries already have high-performance digital infrastructure, and governments in the region are implementing highly ambitious strategies (see the sections on Hungary and Poland in our “Emerging Economies EcoPerspectives“ from March 2026). They have therefore drawn up national plans focused on AI to position their respective countries as key investment hubs.
