Look for:

Our offer for

Research Detail

2020/06/15 / Erste Group Research

Poland Weekly Focus | Did economy recover in May?


After three consecutive cuts, we expect central bank to remain on hold. Labor market conditions should deteriorate further in May, while industry likely somewhat recovered as measures began to be relaxed in May. Bond and FX market to focus on global risk-off mood.

June 16 | End of easing cycle. After an unexpected rate cut to 0.1% at the last MPC meeting, we expect the central bank to remain on hold this time. According to the comments of MPC members, negative interest rates can be ruled out for the time being and stability of rates is the most likely scenario. We think that the target rate will remain locked at 0.1% at least until the end of 2021, while the QE program should continue throughout 2020.

June 18 | Labor market to deteriorate further in May. We expect that the situation on the labor market deteriorated further in May, reflecting the impact of lockdown measures and worsening financial conditions of enterprises. In our view, wage growth should ease to a meager 0.7% y/y, while employment should decline by a stronger -2.7% y/y.

June 19 | Industry should restart production. Together with the easing of lockdown measures since the beginning of May, industrial production has likely gradually restarted. However, with limited operating capacities for hygiene reasons, growth will remain subdued in the coming months. Nevertheless, the contraction should be milder compered to April, as we see industrial production at -16.8% y/y (consensus of -18.0% y/y) in May. We expect the biggest hit to come in 2Q20 and a double-digit economic contraction is a highly likely scenario.

Bond market drivers | Long end of curve followed core markets. Over the course of the week, the long end of the Polish curve went down by almost 20bp towards 1.3%, mirroring the strong decline of German Bunds, which went down by 15bp to below -0.45%. This move reflects last week’s worsening of market sentiment due to the renewed threat of a second wave of COVID-19.
FX market drivers | EURPLN fluctuated around 4.45. On the back of deteriorating global sentiment and increasing risk-off mood, the zloty depreciated and the EURPLN moved to the weaker side of 4.45. Uncertainty over the future path of the recovery and potential second wave of the pandemic are the key factors for both the zloty and markets at the moment. Neither local macro releases, nor the central bank meeting should impact the zloty.

PDF Download Download PDF (308kB)

General information

AuthorErste Group Research
Date2020/06/15
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.