TOP MACRO THEME(S):
- Corporate profits dwindle, margins narrow: “Costs jump, deals slow” story heralded by us in late Aug22 keeps materializing. Indeed, lack of ability to slash input costs significantly, combined with faltering demand, resulted in corporate margins reduction for the second quarter in a row. Energy shock has induced a new wave of investment demand – nominal value of energy sector projects kicked-off in 4q22 almost doubled, indicating that investments and GDP growth will benefit from them next year.
WHAT ELSE CAUGHT OUR EYE:
- Incoming monthly data confirm our 1q23 GDP growth rate forecast (-0.6% y/y) and its structure (consumers in a recession amid a moderate investment demand). Indeed, industry and retailers suffered a setback in February amid contraction of real output and a shake-up of retail sales, while construction output held up pretty well despite lingering housing market. An improvement of deposits growth rate in February as well as declining consumer and mortgage lending also reflected consumer demand woes. Last but not least, producer prices inflation in February eased somewhat signalling that consumer prices will follow suit soon.
- Moody’s will most likely leave Poland’s rating and its perspective unchanged today.
THE WEEK AHEAD:
- CPI inflation most likely run cooler in March, diving below a 16 per cent mark on our estimates.
NUMBER OF THE WEEK:
- -4.7% y/y – growth rate of corporate wages in February, adjusted for inflation.