TOP MACRO THEME(S):
- No fireworks at the start of 2q: April macroeconomic data point to rather weak economic conditions at the start of 2q23, though consumer outlook has improved somewhat.
- CEE gradually looks out for rate cuts: The outlook for further easing of price pressures in the region is favourable, with a perspective of monetary policy normalization looming on the horizon.
WHAT ELSE CAUGHT OUR EYE:
- Investment outlays of large companies (50+ empl.) in 1q23 surprised on the upside with a growth of 7.2% y/y (against 5.9% y/y in 2022). Good investment performance was broad-based and supports our view that investment in the whole economy will continue to grow modestly in 2023.
- Money supply growth (M3) increased by 6.7% y/y vs 6.5% y/y in March, accompanied by a significant monthly increase of cash in circulation, most likely due to PIT refunds. Overall credit growth (y/y) was negative for the first time since Apr.21 due falling volume of both consumer and mortgage loans.
- NBP estimates that fiscal package announced by the ruling party, which would start in 2024, would cost approx. 0.7% of GDP. It is expected to add 0.1pp and 0.3pp to inflation in 2024 and 2025 respectively and 0.3pp and 0.2pp to GDP. Cost of the package proposed by the opposition is estimated at 2.4% of GDP.
THE WEEK AHEAD:
- Our estimates point that CPI in May will decline by app. 1pp.
- The 2nd estimate of GDP growth in 1q23 will include data on its structure which may shed more light on a surprisingly minor fall in GDP (-0.2% y/y). We still expect private consumption to be the main drag on growth.
- Manufacturing PMI shall reflect a further deterioration of economic conditions in the industry, though a 2nd in row monthly decline of input costs and final prices would be much welcomed from the inflation perspective.
NUMBER OF THE WEEK:
- +11.1% y/y –growth rate of the number of foreigners insured in the Social Insurance Institution as of April.