Look for:

Our offer for

Research Detail

2020/06/02 / Erste Group Research

Poland Weekly Focus | Growth forecast remains unchanged


We keep our FY20 GDP growth unchanged at -3.7%. Despite introduction of lockdown in mid-March, economic growth remained solid in 1Q20. Zloty will follow global factors, while bond market participants will continue to digest last week’s rate cut.

Forecast revision | GDP growth remains unchanged. After a careful overview of the available data and detailed GDP structure for 1Q20, we decided to keep our FY20 growth forecast unchanged at -3.7%. Despite the weaker than expected real economy data for April, the 1Q20 growth in annual terms proved to be stronger than we forecasted. However, the biggest hit is yet to come. Economic activity likely bottomed out in April (as evidenced by the double-digit drop in industry and retail sales growth) and the recovery will be gradual. We thus expect growth dynamics to plummet in 2Q20 by around 10% q/q.

The relaxation of measures since the beginning of May should support the recovery and economic activity should improve in the second half of the year, absent any second wave of the pandemic. Within the recovery plan recently proposed by the European Commission, Poland would be (tentatively) eligible for EUR 63.8bn (12.1% of GDP) in the form of grants and loans that could additionally boost investment growth.

The slowing economic growth and low oil prices will drag inflation down. We see CPI on average at 3.1% this year, due to particularly high inflation in the first quarter. The unexpected rate cut by the central bank moved Polish rates to the lowest level in the region and we believe they will stay there at least until the end of 2021. At this point, we do not see the central bank posting negative rates.

Bond market drivers | Long end tumbles on rate cut. Ahead of the central bank meeting and subsequent rate cut, the 10Y yield remained broadly unchanged around 1.4%. The unexpected monetary easing by the NBP pushed the long end of the curve down below 1.2%. However, since then, we have seen a correction, as the 10Y yield moved towards 1.3%. The spread over the 10Y Bund narrowed and remains below 170bp.
FX market drivers | Weaker US dollar supports zloty. Over the course of the week, the zloty appreciated by almost 1.5% and broke the 4.50 mark vs. the EUR. Ahead of the central bank meeting, the zloty benefited from the weaker US dollar and global risk-on mood and moved towards 4.40 vs. the EUR. The unexpected rate cut by the central bank resulted in a weakening of the zloty, as it returned above 4.45 vs. the EUR at the end of the week. Yesterday’s session brought further appreciation of the zloty and the EURPLN went below 4.40.

PDF Download Download PDF (311kB)

General information

AuthorErste Group Research
Date2020/06/02
Languageen
Product nameCEE Country Update
Topic in focusMacro/ Fixed income
Economy in focusPoland
Currency in focusPolish Zloty
Sector in focus-
Download



Accept

We use cookies and web analysis software to give you the best possible experience on our website. By continuing to browse this website, you consent for these tools to be used. For more details and how to opt out of these, please read our Data protection policy.

INFORMATION FOR PRIVATE CLIENTS / CONSUMERS

Any information, material and services regarding financial instruments and securities provided by Erste Group Bank AG or any of its affiliates (collectively “Erste Group“) on this and any linked website hereafter (jointly the “Websites”) shall be exclusively to investors who are not subject to any legal sale or purchase restrictions (the “Interested Party“).

The publication and distribution of information as well as offering and selling of products and services described on the Websites is prohibited by law in some jurisdictions. For this reason, persons in countries in which the publication as well as the offering and selling of products and services described on the Websites are not permitted by law, must not enter the Websites and/or acquire the products displayed on the Websites.

Neither Erste Group nor any third party shall offer access to the Websites or offer the products to especially, but not limited to citizen/residents of the United States and “U.S. person” (as defined in Regulation S under the US Securities Act 1933 as amended). For this reason, the distribution or redistribution of the information, materials and products into United States or into any other jurisdiction where it is not permitted under the applicable law, as well as to the citizens/residents of these countries shall be prohibited. The securities displayed on the Websites have not been and will not be registered under the US Securities Act of 1933 and trading in the securities has not been approved for purposes of the US Commodities Exchange Act of 1936. For this reason the securities may, inter alia, not be offered, sold or delivered within the United States or, for the account and benefit of U.S. persons.

The Interested Party is solely responsible to examine, whether he may enter the Websites under the law applicable to it. Erste Group shall not be responsible for the distribution of content of any of the Websites to individuals or entities which provide false information about their right to enter the Websites. For this reason Erste Group shall not be liable for any legal claims or damages which may result from the unauthorized entering or reading of the Websites.

By agreeing to this hereto, the Interested Party confirms that
(i) It has read, understood and accepted this Information and the Disclaimer;
(ii) It informed itself about any possible legal restriction and warrants that it is not restricted or prohibited to enter the Websites according to any law applicable; and
(iii) It does not make available the contents of the Websites to any person who is not qualified by law to enter the Websites.