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2020/05/11 / Erste Group Research

Poland Weekly Focus | GDP to stumble on lockdown

Flash estimate of economic growth in 1Q20 to be in focus this week. We expect economy to slow to around 1% y/y in 1Q20 on back of containment measures introduced in mid-March. NBP to buy bonds within QE program.

May 13 | NBP to hold another QE operation. This week, the National Bank of Poland will hold its first QE operation in May. The second outright operation is scheduled for May 27. The NBP has so far bought papers worth in total PLN 62.6bn, out of which PLN 50bn is in Treasuries and PLN 12.5bn in state-guaranteed bonds issued by the PFR and BGK.

May 15 | Economy to slow down in 1Q20. The flash estimate of 1Q20 GDP growth will be in focus this week. We expect the economy to slow to 1.2% y/y in 1Q20 due to the containment measures imposed in mid-March. The solid start to the year (January-February) will likely compensate for some of the negative effects of COVID-19 on GDP growth in the first quarter. However, the negative impact of the lockdown has already been visible in the March data, as retail sales and industrial production growth both went into negative territory.

Bond market drivers | 10Y yield stabilized around 1.5%. Over the course of the week, the Ministry of Finance and state institutions issued PLN 31.5bn of bonds. Out of this amount, BGK sold PLN 8bn of 7Y papers, PFR PLN 18.5bn in 5Y papers and the MinFin issued debt worth PLN 5bn. Despite increased issuance, the pressure on the yield curve was limited. The 10Y yield stabilized at around 1.52%, the 5Y moved within a 1-1.05% range, while the 2Y yield increased to 0.55%.

FX market drivers | EURPLN fluctuated around 4.55. The EURPLN remains locked at around 4.55 and we expect it to remain on elevated levels in the quarters to come. Neither the US labor market report for April, nor the ruling of the German Constitutional Court moved the zloty. This week, the flash estimate of Polish GDP growth could be in focus for the zloty, but we do not expect any strong reaction as the EURPLN follows global virus-related news.

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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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