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2021/02/22 / Erste Group Research

Poland Weekly Focus | Flash 4Q20 GDP growth to be confirmed

We expect flash estimate of 4Q20 GDP growth to be confirmed at -2.8% y/y. Household consumption likely contracted by around -2.6% y/y, while investment growth could have recorded double-digit drop. We remain cautious about this year’s recovery and see FY21 GDP at 3.1%.

February 26 | 4Q20 GDP growth to be confirmed at -2.8% y/y. According to the flash reading, GDP growth landed at -2.8% y/y (-0.7% q/q s.a.) in the last quarter of 2020 and we expect this to be confirmed. The re-introduction of containment measures in 4Q20 weighed on economic activity to a lesser extent than in 2Q20, as external demand and the manufacturing sector remained strong. The retail and services sector were the main drag on growth in 4Q20. Based on full-year data, it can be expected that household consumption contracted by around -2.6% y/y in 4Q20, while investment growth could have marked a double-digit drop. All in all, we remain cautious and expect FY21 GDP growth of 3.1%.

Bond market drivers | 10Y yield fluctuates around 1.35%. Despite further yield increases on the core market, where the 10Y German Bund went up by around 10bp to -0.3% and 10Y US Treasuries by 15bp to 1.35%, the 10Y LCY yield remained broadly unchanged at around 1.35%. As a result, the spread against the 10Y Bund narrowed to below 170bp. The MinFin sold papers worth PLN 5.8bn at last week’s auction. As a result, the financing situation is quite comfortable, as Poland has already covered around 53% of this year’s borrowing needs. At the end of the week, the MinFin will announce the planned bond supply in March. According to the quarterly schedule, two auctions are planned for March.

FX market drivers | Zloty locked below 4.50 vs. EUR. Over the course of the week, the EURPLN fluctuated in a narrow range of 4.48-4.50. Since the beginning of February and strong appreciation of the zloty below 4.50 vs. the EUR, the currency pair is in a sideways trend. We think that investors remain cautious, as the NBP reiterated its concerns over the zloty being too strong and signaled its readiness for further FX interventions. Therefore, more visible appreciation below the level of 4.50 seems unlikely in the coming weeks.

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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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