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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.

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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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