In today's Eyeopener:
August started with still strong positive momentum of economies recovering after spring lockdowns. At the same time COVID-19 statistics of daily cases show that the world is facing the second wave of the pandemic. As a result there is pressure to reintroduce restrictions, also in Poland, albeit shaped in such a way not to curb activity in the recovering economies. Still, it is worth to track current data, especially the US ones – July output and retail sales, August consumer sentiment – in search of negative impact of the intensifying pandemic.
In July all sectoral business sentiment indicators improved, with both the current assessment and the expectations sub-indexes rising across the board. Industry expectations index is already back to pre-pandemic level. Consumer sentiment also kept improving in all aspects. Views on current and future own financial situation as well as on overall economic situation are already less negative than during the last two downturns. The July sentiment indexes support the view of V-shaped economic rebound.
After a very deep collapse of economic activity in April, May and June saw signals of rebound from the bottom, as the economic and social restriction were being lifted. Possibly, we are approaching the wave of upward forecasts revisions (especially those more pessimistic). While most of developed countries were able to suppress the numbers of new infections effectively, in many emerging economies the wave is still rising. Worrying sign is the resurgence of infections in regions where restrictions were relaxed after they seemingly coped with pandemic.
We still believe the scenario of economic growth for Poland could be V-shaped: after GDP drop by almost 12% y/y in 2Q20, every next quarter should be better and as a result GDP could drop by c.4% this year and rebound by almost 6% in 2021.
In September's Rates and FX Outlook: