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2020/11/23 / Erste Group Research

Poland Weekly Focus | Retail and industry slowed down in October

Deteriorating market sentiment and rising uncertainty about the development of the pandemic weighed on the performance of the retail sector in Poland. We expect a stronger drop in November, as containment measures were put in place at the beginning of the month.

November 25 | Stable unemployment rate in October. According to the preliminary data of the Ministry of Labor, Family and Social Policy, the unemployment rate is expected to remain stable at 6.1% in October for the fifth month in a row. Current containment measures weigh mostly on employment in such sectors as restaurants and hospitality as well as retail trade. The increasing number of employees on ‘Kurzarbeit’ (short-time working) schemes, childcare leave, or in quarantine will likely drag employment down that is still lower by around 128tsd compared to February 2020.

Bond market drivers | 10Y yield stayed below 1.2%. Over the course of the week, the long end of the Polish curve moved in a narrow range between 1.16-1.2%. On the other hand, core markets continued their downward trend, as the 10Y German Bund decreased toward -0.59%. As a result, the spread against the 10Y Bund returned towards 180bp, which we see as a justifiable level. This week, BGK is scheduled to sell bonds in the second auction this month. At the first auction, BGK issued debt worth around PLN 2.6bn, bringing the total issuance to PLN 91.1bn. Moreover, the MinFin will hold a switch auction this week.

FX market drivers | EURPLN stabilized below 4.50. Improved global market sentiment, and the weakening bias of the US dollar since the beginning of November, pushed the EURPLN below the 4.5 level. The ongoing dispute with the EU over the conditionality of EU funds on compliance with the rule of law seems so far not to have bothered investors. We expect the zloty to return above the 4.50 against the EUR by the end of the year as the economic outlook and recovery path remain uncertain.

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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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