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2020/10/19 / Erste Group Research

Poland Weekly Focus | Real economy data for September

Industrial production and retail sales data for September due this week. Performance of retail sector might surprise to upside, given stronger than expected labor market data (wage growth in particular). Available real economy data for 3Q20 suggests GDP growth of -4.2% y/y in 3Q20.

October 20 | Industry to improve in September. We expect industrial production to improve further in September and arrive at 2.6% y/y, which is below market expectations of 3.7% y/y. On the one hand, the positive calendar effect (+1 WD) should be positive for the figure. On the other hand, the improvement of sentiment in the manufacturing sector, as evidenced by the PMI and local sentiment indicator, was milder than in previous months.

October 21 | Retail sales to recover after weaker end to summer. After weaker than expected retail sales data for August, we expect growth to land at 1.1% y/y (1.6% y/y in real terms) in September. We are a bit less optimistic than the market, but a positive surprise cannot be ruled out, given stronger labor market data for September, in particular dynamic wage growth. All in all, based on the available data for the third quarter, our now-cast model points to GDP growth of -4.2% y/y in 3Q20. We continue to see FY20 GDP growth at -3.2% this year, but the current sharp increase in new COVID-19 cases and introduced measures could weigh especially on the performance of the services sector in 4Q20.

Bond market drivers | Long end went below 1.3% Over the course of the week, the 10Y German Bund went sharply down by almost 10bp to -0.62% on the back of the latest Brexit and pandemic news. The local yield curve mirrored core market developments and also went down. The LCY 10Y yield dropped below 1.24% for a limited time, which is the lowest level since the beginning of August. The end of the week brought an increase on the long end, as it went towards 1.28%. As a result, the spread over the 10Y Bund widened toward 190bp. With limited bond supply, the room for yield increases on the long end is limited.

FX market drivers | Zloty back on weakening track. Since the beginning of October, the zloty has been fluctuating around 4.5 vs. EUR. However, last week’s increase in global risk aversion resulted in emerging market sell-offs and the zloty weakened. The EURPLN returned to the weaker side of 4.50 and went toward 4.58. This week, the development of the pandemic and publication of October’s PMIs for the Eurozone and major member countries will be the most important release for the EURUSD and hence the zloty.

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General information

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


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