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2021/01/18 / Erste Group Research

Poland Weekly Focus | How did Poland perform at year-end?

Labor market statistics and retail sales data for December is due. We expect broadly unchanged picture on labor market, while retail trade likely benefited from eased restrictions. NBP is scheduled to buy bonds, MinFin to hold regular bond auction.

January 21 | Unchanged situation on labor market. Labor market statistics for December should show a broadly unchanged picture of the labor market, which weathered the crisis in quite good shape. We expect wage and employment growth to maintain similar growth dynamics as in November and arrive at 4.2% y/y and -1.0% y/y, respectively. This year, we could see some deterioration on the labor market, as government support programs are limited compared to last year.

January 22 | Retail sales to recover in December. As Poland eased restrictions and opened retail stores in shopping malls at the beginning of December, we expect an improvement of retail sales growth dynamics towards -0.8% y/y from the -5.3% y/y reported in November. In December, consumer sentiment improved slightly, suggesting better performance on the part of the retail sector compared to previous months. All in all, we see risks to the upside to our current FY20 GDP growth forecast, which stands at -3.3%.

Bond market drivers | 10Y yield dropped below 1.2%. Over the course of the week, the long end of the Polish curve moved down and dropped below 1.2%. As a result, the spread over the 10Y German Bund narrowed towards 170bp. The spread narrowing has been observed since its height, of close to 200bp, reached in mid-December. The NBP is scheduled to buy bonds on January 20, while the MinFin will hold a second regular bond auction on January 22. The bond supply should stand at PLN 5-9bn.

FX market drivers | EURPLN locked above 4.50. Last week, the zloty depreciated somewhat and moved toward 4.54 vs. the EUR, likely on the back of the stronger US dollar. The National Bank of Poland decision, as well as the press conference of Governor Glapinski, did not affect the zloty. The central bank left the target rate stable at 0.1% despite the governor’s comments at the turn of the year about possible monetary easing in 1Q21. In the statement released after the rate meeting, the MPC reiterated its concern over the too strong zloty and did not rule out future market interventions.

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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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