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2020/04/20 / Erste Group Research

Poland Weekly Focus | Real economy to go into red in March

Industry and retail sales growth data for March to reveal effect of lockdown on economy. We think that COVID-19-related layoffs may already be visible in March unemployment figures. Markets to focus on global news.

April 21 | Industry to contract in March. After solid industrial performance in February, the measures introduced to curb the spread of COVID-19 have resulted in the limitation or halting of production in many sectors. We therefore expect industrial production growth to dive into negative territory in March and land at -2.1% y/y. However, a much deeper drop cannot be ruled out.

April 22 | Lockdown to weigh on retail sales growth. We expect retail sales growth for March to land at -0.9% y/y (-4.7% y/y in real terms). According to the Google mobility report (as of April 11), mobility is currently 57% lower compared to the baseline in groceries and pharmacies. However, we think that solid retail performance in the first week of March and stronger growth in the second week due to pre-stocking might compensate for some of the negative effects in the second half of the month.

April 24 | Unemployment rate to increase. Our forecast of the unemployment rate already sits at 7.8% in March due to COVID-19-related layoffs. On the one hand, we saw a 4.7pp increase of the unemployment rate in Austria according to national methodology. On the other hand, the rise in the unemployment rate in Czechia and Slovakia was still subdued in March.

Bond market drivers | Limited volatility on bond market. The monetary easing resulted in a significant drop of yields along the whole curve. Over the course of the week, the 10Y yield moved in a narrow range of 1.35-1.4%. As a result of such a strong drop in LCY yields, the spread vs. the 10Y Bund narrowed significantly and bottomed out at the beginning of the week below 180bp. Following the decrease in the 10Y Bund below -0.45%, the spread recovered and increased towards 190bp.
FX market drivers | Zloty improved somewhat. Over the course of the week, the zloty fluctuated around 4.53 vs. the EUR and some signs of downward movement can be observed. This week, the flash release of Eurozone PMIs for April might get some market attention; however, the duration of containment measures will remain the crucial factor for the economic outlook, and thus for the EURUSD.

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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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