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2019/07/15 / Erste Group Research

Weekly Focus Poland

Full set of macro indicators for June to be available as of this week. Wage and employment growth should confirm that situation on labor market remains favorable. We expect industrial production growth to slow down to 4.2% y/y, due to negative calendar effect. Retail sales should sustain solid growth dynamics supported by record-high consumer sentiment. Our final GDP now-cast for 2Q19 to be published; currently it points to growth above 5%.

July 17: Wage growth to sustain strong dynamics. We expect wage growth to accelerate to 8.3% y/y in June, which is above the market consensus of 7.1% y/y. Moreover, employment growth should marginally increase and arrive at 2.8% y/y.

July 18: Calendar effect to downplay industrial production. We see industrial production growth slowing down to 4.2% y/y in June and are a bit more optimistic than the market (consensus is 2.0% y/y). The negative calendar effect (-2 working days) in June will most likely be the main reason behind weak industrial performance. Moreover, we observed a further decrease of manufacturing sentiment in June, to 5.2 from 6.2 in May.

July 19: Retail sales growth to remain strong. We expect retail sales to arrive at 7.9% y/y in June, supported by the favorable situation on the labor market and record-high consumer sentiment BWUK that came in at 9.6 in June. All in all, retail sales growth in 2Q19 should on average be stronger compared to 1Q19.

Bond market drivers: Polish 10Y yields went up despite dovish Fed. Ahead of Jerome Powell’s testimony to Congress on Wednesday last week, the long end of the curve dropped further and bottomed out on Wednesday to below 2.20%. However, despite the dovish speech of the Fed chairman, yields on core markets developed counterintuitively and went up by 15bp. Following this, Polish yields also went up by more than 10bp and closed the week at around 2.3%.
FX market drivers: Zloty paired recent gains and depreciated. The FX market also surprised us last week. Despite the dovish testimony of Jerome Powell and weaker US dollar as the aftermath to his report to Congress, the zloty depreciated toward 4.27 vs. the EUR. Currently, we see the EURPLN as being close to our end of quarter forecast of 4.28.

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General information

AuthorErste Group Research
Product nameCEE Country Update
Topic in focusFX, Macro/ Fixed income
Economy in focusPoland
Currency in focusPolish Zloty
Sector in focus-


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