Economic comment

Construction output rose in February by 5.6% y/y (or 5.8% y/y after seasonal adjustment), which was way above market expectations (near 1% y/y). Retail sales rebounded to 7.3% y/y in February from 3.4% y/y in January with a broad-based recovery in most categories and also beat consensus at about 4% y/y. March sectoral business sentiment indicators worsened (albeit still did not reflect the situation after the lockdown as the GUS business sentiment surveys are collected in the first 10 days of each month). The today's data, together with better than expected results of manufacturing, imply that the scale of GDP growth deceleration in 1Q might not be very dramatic (yet), even taking into account possible losses after the country lockdown in mid-March. The big deterioration in economic activity is yet to come, though.

The government outlined the rescue package (the “Anti-crisis Shield”) aimed at supporting the economy and countering the effects of the coronavirus. The total value of the programme was estimated at PLN212bn (c.9% of GDP), out of which PLN67bn represents actual public spending (about 3% of GDP), PLN75bn in government’s liquidity support and PLN70bn in NBP liquidity support. (...)

Industrial output growth accelerated to 4.9% y/y in February from 1.1% y/y in January. Seasonally adjusted numbers showed a growth by 3.2% y/y versus 3.5% y/y in January. The numbers came out strong, above the market consensus (2.0% y/y). It seems that the Polish industry was getting started to follow an upward path at the start of 2020, unfortunately the Coronavirus spread is very likely to hinder that recovery. In the months to come, we are expecting a strongly negative impact of the epidemic on the economic growth.