The pandemic resurgence is the number one issue again. Most European countries (including CEE) see the number of Covid-19 cases rising to new record highs, which triggers worries about the economic outlook. Even if governments will be quite reluctant to re-impose tight restrictions (which seems likely), the economic activity may suffer due to psychological effects (likely to affect consumer behaviour) and/or quickly rising number of people in quarantine (effectively reducing the available workforce across branches). It is too early to say precisely what will be the economic impact, but we think it is too early to adjust 4Q forecasts lower.
It’s the politics, stupid! – this could be the theme of the next week in Poland. We were supposed to enjoy three years without election campaign, but those plans may be potentially outdated due to sudden conflict in the ruling coalition. PiS leaders suggested recently that among possible options is the breakdown of the coalition or even early elections. At this junction, we find it difficult to judge to what extent it is just a political game, and to what extent the risk of snap elections has increased indeed. We do not think the latter is a base-case scenario for now, but the next few days should reveal more clarity on this front (on Monday the PiS leadership will decide about further steps). If the risk of coalition breakdown increases, it could potentially push the economic data releases to the background, at least at the start of the week.