TOP MACRO THEME(S):
- No happy ending (of 2022) in the CEE region (p.2) Despite solid growth in 2022, GDP data for 4q22 confirmed further deterioration of economic conditions in CEE economies, driven by falling consumer demand. Inflation has likely passed its peak and disinflation should gather momentum in 2h23.
WHAT ELSE CAUGHT OUR EYE:
- February saw another increase (to 41.9%) of enterprises reporting insufficient demand as a barrier for development. Despite being relatively low in historical perspective, amplification of this barrier is noticeable in furniture sector and those dependent on demand from the construction sector (e.g. metal and mineral production). Together with reported lower price expectations of enterprises, it is a strong disinflationary factor.
- Manufacturing PMI in February increased for a fourth consecutive month, to 48.5 pts from 47.5 pts in January, on the back of improvement in output and new orders indicators. Non-replacement of job leavers led to further fall in employment. For the first time in three years delivery times decreased, adding steam to deceleration of price pressure index, which is already reflected in falling PPI inflation.
- Detailed data confirmed a slowdown of GDP growth in 4q22, to 2.0% y/y from 3.6% in 3q22. Private consumption decreased by 1.5% y/y, for the first time since the pandemic, meaning that consumer recession has already began. On a more positive note, investment growth accelerated to 4.9% y/y from 2.0% in 3q22. We still expect negative GDP growth rate in 1q23.
- In January state budget recorded a surplus of PLN 11.2bn. In the corresponding period of 2022 the surplus was nearly twice as high.
THE WEEK AHEAD:
- MPC meeting on Wednesday will be the key event next week, which should be all the more interesting as a new Inflation and GDP projection will be published. We do not expect any changes in interest rates, but we will be looking for some hints on possible rate cuts in light of the updated inflation path. Apart from this, domestic macroeconomic calendar is rather empty.
NUMBER OF THE WEEK:
- 308.6 thous. – record high number of repaid housing loans in 2022 in comparison to around 100 thous. in previous years