Poland Macro Weekly: Not great, not terrible

Not great, not terrible: Monthly economic activity indicators for September were mixed versus expectations, but on average in 3q22 deteriorated as compared to 2q22, implying further GDP growth slowdown.

Consumer sentiment deteriorated in October. The assessment of economic situation in the past 12 months is now the worst in the survey’s history (since 2003). For the second month in a row unemployment fears increased. Over 50% of respondents indicate that it is a bad time for major spending.
The NBP Economic Survey shows that despite a significant deterioration in the business climate measures, the real decline in economic activity has been so far relatively small. In 3q22 companies report historically high uncertainty and forecasted demand indicators recorded deep declines.
Core inflation (CPI excl. food and energy) grew to 10.7% y/y in September from 9.9% in August. It remains heavily influenced by the second-round effects as companies are able to easily pass higher costs on consumers. PPI inflation in September fell for the first time since 2020 (on lower oil and commodity prices), to 24.6% y/y vs. 25.5% y/y in August.
The central budget surplus remained roughly stable after Sep., at PLN 27.5bn, with some signs of further weakening in VAT revenues but with stable PIT inflows. Spending was limited, with a lower subsidy to the Social Insurance Fund. Its Board (ZUS) resigned from a PLN 4bn budget subsidy, as the coverage ratio is record high 86.4%.
The general govt. deficit (4q cumm., ESA) remained at 1.5% GDP after 2q22, while public debt declined to 51.6% GDP, despite major unexpected spending on refugees and military equipment.

Final September unemployment rate could be lower than the early estimate (4.8%), as a periodic revision likely pushed the number of employed up.
The growth of M3 money supply has likely stabilized in October, but the decline of a narrower measure M1 has likely continued.