Economic Analysis

In today's Eyeopener:

- Stock markets down
- Stable dollar, zloty and other CEE3 currencies
- Bond yields up
- Today Poland’s industrial output, PPI and labour market data 

Calendar for the upcoming week is packed with Polish March’s macro data and these are likely to stay in the fore. We are entering a period when the traditionally eyed y/y growth rates will be misleading due to the dramatically low statistical base from the last year. A lot of economic indicators is probably going to show seemingly good results, with two- or almost two-digit annual growth rates (industrial output, retail sales), but comparison to 2019 will be more telling, we think. In general it is difficult to say whether the data will provide an impulse for trading, but we think they may be slightly tilted to the positive side. Apart from economic releases, information about the pandemic will still be important. Risk factors include Polish politics and geopolitics (...)

Final data confirmed the quick rise of Polish CPI in March to 3.2% y/y from 2.4%. Our estimates still point to a rebound of core inflation in March to c.4% y/y. While services prices inflation remained high (7.3% y/y), goods prices inflation accelerated to 1.9% y/y, which is the highest pace since April 2020. In our view headline inflation may climb even to around 4% in April and May, but later should recede to the 3-3.5% area for the rest of the year.

A strong economic revival is still on the horizon, but is like a vanishing point – moving further away even as we travel in that direction. The third wave of the Covid-19 pandemic in Poland is in full swing and has already proven to be more severe than the previous one (yet still less deadly, hopefully thanks to the vaccination of the elderly population). The restrictions introduced so far by the government are a bit tougher than those seen in the autumn and winter but unless they prove to be "too little, too late" to tame the virus spread, they should not change the economic outlook drastically. A sharp pickup in GDP growth is still possible before the year end, in our view, but may be delayed vs. our previous forecast. We lower our 2021 GDP growth forecast to 4.2%, but lift our estimate for 2022 to 5.1%. Consensus forecasts for the European economy are moving in a similar direction (...).
 

In September's Rates and FX Outlook:
 

• Poland’s GDP growth failed to accelerate in 2Q16, with investments surprising negatively (-4.9% y/y), and we think that the second half of the year will see no significant improvement in economic growth. Although private consumption is likely to gain strength in the coming quarters, supported by solid labour income and the new child subsidies, it may take time until investments recover, and the positive impact of net exports will be hard to maintain (export growth may decelerate and imports accelerate). We expect a more significant investment pick-up next year, but by then the impact of the 500+ child benefit programme on consumption will be dissipating. Therefore, we forecast that GDP will grow 3.1% in 2016 and 2.9% in 2017.