|2022/01/24 / Erste Group Research|
Poland Weekly Focus | How strong was the economic growth in 2021?
Available real economy data point to GDP growth of about 7.0% y/y in 4Q21. FY21 GDP growth expected at 5.5% but an upside surprise cannot be ruled out, due to the extremely good performance of the economy in 4Q21.
January 26 | Unemployment rate to remain unchanged in December. We expect the unemployment rate to remain unchanged at 5.4% in December. In 2022, the pressure on the labor market will remain elevated, with low unemployment and strong wage growth. It remains to be seen whether the double-digit wage growth dynamics observed in December were affected by one-off factors or will stay with us for longer, undermining the central bank’s efforts to bring inflation back to the target.
January 26 | FY21 GDP growth to land at 5.5%. The COVID-19 pandemic resulted in Poland's first recession in 30 years, as GDP growth contracted by 2.5% in 2020. However, the economy recovered briskly, as it returned to its pre-pandemic level already in 2Q21 and continued to expand strongly in 2H21. Therefore, we expect FY21 GDP growth to reach 5.5%, but an upside surprise cannot be ruled out, due to the extremely good performance of the economy in the last quarter of 2021. Real economy data suggest that GDP growth could have reached about 7.0% y/y in 4Q21. Economic growth is set to ease this year toward 4.6% but the risk balance is tilted visibly to the downside.
Bond market drivers | 10Y yield back fluctuates around 4.0%. While the beginning of January brought a global bond market sell-off, exacerbated by market bets for aggressive tightening of the monetary policy by the Fed, last week saw a slight correction on core markets and in Poland. The 10Y LCY yield dropped by 30bp from last week’s peak at 4.12%, reflecting the correction on the long end of the German Bund curve, where the 10Y yield decreased by around 8bp to -0.07%. As a result, the spread over the 10Y Bund narrowed to 390bp after hitting a decade-high last week. However the comments from Governor Glapinski, which followed the release of strong industrial production and wage growth data for December, resulted in a turnaround on Monday morning.
FX market drivers | Zloty strengthened since the start of the year. The stabilization of the US dollar and improved global risk aversion supported all CEE currencies, including the zloty. Since the beginning of the year, the PLN has gained as much as 1.4% against the euro. Despite the recent quite substantial strengthening of the zloty toward 4.50 vs. the EUR, we remain cautious and expect the PLN to return to the weaker side of 4.55 vs. the EUR in the coming weeks. We think that unclear interest rate outlook will remain a drag on the zloty. Moreover, the ongoing conflict with the EU and geopolitical risks related to the potential conflict between Russia and Ukraine remain a negative factor for the PLN.
Download PDF (203kB)
|Author||Erste Group Research|
|Product name||CEE Country Update|
|Topic in focus||Macro/ Fixed income|
|Economy in focus||Poland|
|Currency in focus||Polish Zloty|
|Sector in focus||-|
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.