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2019/08/27 / Erste Group Research

Weekly Focus Poland

GDP structure and flash CPI to be published at end of week. Domestic demand should remain pillar of growth, with inflation expected to marginally ease in August. We continue to see limited impact of domestic releases on bond and FX market.

August 30: Flash CPI to ease marginally to 2.8% y/y in August We see the inflation rate easing to 2.8% y/y in August (2.9% y/y in July), in line with market expectations. The growth in food prices should remain the main factor pushing inflation up, while oil prices at lower levels compared to a year ago should lower the headline number. All in all, the inflation rate is likely to remain above the 2.5% target and peak at the beginning of the year. At this point, however, even with inflation going toward 3.5%, i.e. the upper bound of the target, we maintain our call for stability of rates.

August 30: 2Q19 GDP structure Despite slowing dynamics, the 4.4% y/y growth rate in 2Q19 is solid. The structure should show that domestic demand remains the pillar of growth. In particular, private consumption should support robust economic performance in the second quarter. The contribution of investments should also be positive. Net exports do not necessarily have to have suffered in the previous quarter, despite the slowing external environment.

Swinging Polish 10Y yield Over the last week, the long end of the curve went up to 2%, but moved back down by 10bp at the beginning of this week. We believe that domestic factors currently have limited influence on the bond market. With important international events last week, global sentiment lay behind bond market development. The spread vs. Bunds have widened toward 260bp. This week, out of two local releases, the flash CPI is potentially more important for the bond market.

EURPLN holds visibly above 4.30 Currencies fared the negative sentiment that appeared on global markets towards the end of last week relatively well, meaning that the zloty has not depreciated further. The EURPLN remains visibly above the long-term trend, however. The FX market should remain under the influence of global factors with the release of the flash estimate for Eurozone inflation for August as potentially important for the EURUSD move.

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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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