Poland Macro Weekly: January inflation compensates for weak GDP

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TOP MACRO THEME(S):

• Overall good year for CAB in the region (p.2) – as terms-of-trade shock has been fading away, the CEE-4 saw a significant improvement in CAB in 2023.

WHAT ELSE CAUGHT OUR EYE:

• CPI inflation dropped significantly in January, to 3.9% y/y compared to 6.2% y/y in Dec. The scale of disinflation was stronger than most market forecasts (cons.: 4.2% y/y) and close to our expectations (PKO: 3.8% y/y). All the main components stood behind the decline in inflation y/y. The data is preliminary and will be revised in March, according to a new basket. We expect CPI inflation to reach the target in Mar./Apr. It will then rise towards 5% in Dec., assuming extended freeze on energy prices (or to 8% if they are unfrozen).
• GDP in 4q23 increased by 1.0% y/y after an increase of 0.5% y/y in 3q23, and its dynamics was in the lower part of the range of estimates based on annual data. Seasonally adjusted data indicate GDP stagnation q/q (after an increase of 1.1% q/q in 3q23) and an increase of 1.7% y/y. However, the recent pattern of seasonally adjusted data is still very unintuitive - strong increases are followed by decreases, which indicates the persistent imperfection of the algorithm for seasonal adjustment. The annual GDP growth in 4q23 places Poland among the European leaders (GDP growth of 1.7% y/y against 0.3% y/y in the EU and 0.1% y/y in the eurozone).
• Preliminary ministerial data showed that the number of unemployed increased in January by 49.5 thous. to 837.7 thous., stronger than usual in January. This implies a registered unemployment rate of 5.4%. On a more positive note labour demand increased as well, as the number of vacancies was 4.9% higher than in Jan. 2023.

THE WEEK AHEAD:

• We expect robust readings of monthly economic indicators, in particular of construction and industrial output, supported by favourable calendar effect. On the labour market front, while wage growth was boosted by minimum wage increase, January employment data should reflect in the rearview mirror the cooldown in labour demand in 2023 as Statistics Poland conducts an annual update of the sample of surveyed companies.

NUMBER OF THE WEEK:

• 18% - the share of surveyed Poles finding it impossible to save money according to Economic Information Office (25% in 2022).

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