TOP MACRO THEME(S):
- Housing market: The worst is over: Continued decline in transaction volume and slower growth (y/y) of housing prices were main trends in 3q22. With housing starts dropping sharply we should see restored market equilibrium in approximately 2-years’ time.
WHAT ELSE CAUGHT OUR EYE:
- Poland’s CPI inflation in November settled at 17.5% y/y, slightly above the 17.4% flash estimate, but still down from 17.9% in October. The headline inflation rate was lowered by energy and fuel prices. We will have to wait a while for a downward trend in case of core inflation and food prices, while energy costs will drive CPI inflation up in early 2023.
- CAB deficit stood at EUR 549m in October. The monthly deficit was lower than expected, and much lower than in September, but in 12m rolling terms the gap widened to 3.9% of GDP from 3.7% after 3q22. However, the deficit is still easily financed by stable FDIs inflow, and is lower than in other CEE countries. Despite the global downturn, Polish exports continue to grow at a high rate.
- Poland's lower house adopted the 2023 budget bill with budget deficit capped at PLN 68bn. The budget is built on GDP growth assumption of 1.7% and average annual inflation at 9.8%. Higher actual inflation is likely to make up for lower growth therefore the planned deficit seem feasible.
THE WEEK AHEAD:
- Another dose of local macro data (economic activity and labour market indicators for November – details in calendar) will confirm the economy is losing momentum, but the labour market is remaining relatively resilient.
- Politicians will be consulting a bill (regarding functioning of the Supreme Court) aimed at getting a green light from the European Commission for disbursement of EU funds for Poland within the Recovery Fund.
NUMBER OF THE WEEK:
- -1.8 m/m – monthly decline in prices of solid fuels (coal for households) in November, the first fall since February.