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2019/11/25 / Erste Group Research

Poland Weekly Focus | Domestic demand driving growth

3Q19 GDP structure to confirm that domestic demand is driving growth. Investment could show some negative signs, while private consumption will likely prove to be strong. Flash inflation reading for November might bring surprise, as we expect it at 2.3%.

November 29 | November inflation to ease. We see flash inflation for November easing to 2.3% y/y (0.0% m/m), due to dropping oil and energy prices. In light of the incoming data, we have recently revised our FY20 inflation forecast down to 2.1%, from 2.7%. We expect that next year’s oil prices will remain at the current low level, pushing transportation costs down. Moreover, the government announced that it would keep electricity prices for households frozen in 2020.

November 29 | Could net export surprise markets? The flash estimate of 3Q19 GDP landed at 3.9% y/y, sliding below the 4% margin for the first time in ten quarters. We think that GDP was driven by domestic demand, with private consumption being the pillar of the growth. Investment activity likely ease in 3Q19, due to the slowing utilization of EU funds. A surprise might come from net export, which could have had a positive contribution to the overall figure. All in all, we see FY19 growth at 4.2%.

Bond market drivers | 10Y yield stable at 2.05%. Over the course of the week, there was not much happening on the long end of the curve. The Polish 10Y yield stabilized around 2.05% and remained calm around that level throughout the week. We think that the flash inflation reading for November could catch some market attention and could move the long end of t

FX market drivers | Zloty ignored improved Eurozone sentiment. Despite the better than expected Eurozone PMI data and local industrial production for October, the zloty weakened and the EURPLN remained close to 4.30 throughout the week. As for the bond market, we think that the flash inflation reading for November could push the EURPLN further up, especially if inflation drops visibly below the inflation target at 2.5%.

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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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