Weekly

The last set of economic data for October published in the recent days have been mostly disappointing, with growth in wages, retail sales, manufacturing and industrial orders, as well as money supply slowing down and below forecasts. Corporate earnings also deteriorated markedly in 3Q22. This looks like a prelude to a (what we expect to be) pronounced deceleration in the economy, which we expect to culminate in H1 2023 (when GDP y/y growth will likely drop below zero). This deceleration should support disinflationary trends, eventually. However, before it happens, inflation will still rise in the coming months. (...)

A week filled with monthly data from Poland lies ahead. We see a risk that the numbers describing current economic activity in Poland in October (industrial and construction production, and to some extent also retail sales) will be weaker than the market assumes. This week we saw that the Polish economy decelerated at a moderate pace in 3Q (GDP growth of 3.5% y/y did not deviate down from expectations), but the culmination of negative factors is still ahead of us and the numbers from the beginning of 4Q may already indicate this. On the other hand, we do not think that the October readings already show a negative adjustment of the labour market to the weakened economy - both we and the market consensus expect the continuation of a high (though not as high as CPI) rate of wage growth and only a marginal reduction in the rate of employment growth.