GDP growth could increase by nearly 12% y / y in Q2, and the seasonally adjusted GDP could increase by approx. 3% q / q, estimates Paweł Durjasz, chief economist of PZU.
“The data for the next month confirm a clear recovery in the Polish economy. The seasonally adjusted industrial output in June alone increased by 0.2% MoM, after an increase of 0.7% MoM in May. but let us remember that it has already reached a very high level, clearly exceeding the pre-pandemic trend. Secondly, in virtually all countries – also in Poland – bottlenecks that disorganize production, arising in conditions of strong, synchronized recovery , semi-finished products, supply disruptions, problems with the availability of means of transport, etc,” wrote Durjasz in his economic commentary in August.
According to him, with the large scale of orders already accumulated by the companies, the production backlog is clearly growing.
The “bottlenecks” problems will be resolved over time, and the manufacturing output in this situation will continue to support the economic recovery later in the year. The Markit PMI index in manufacturing fell in July to 57.6 points. However, it recorded the second highest result in history. The GUS synthetic index of the economic situation of the Polish economy has already reached the level from March 2019.
The prospects for industrial production growth and recovery in the entire economy remain very good, emphasized the economist.
Durjasz pointed out that retail sales (in constant prices) in June were 8.6% higher than in the previous year. In June alone, sales (rebound) increased by 0.8% after a very strong rebound in May and is almost 4% higher than before the pandemic (February 2020). Unlocking deferred demand now shifts to services. It can be assumed (we do not have official data yet) that the consumption of services increased significantly in June and July. At the same time, after three months of strong growth, construction and assembly production (reseason) fell by 1.5% MoM in June. Construction production is at the same time 4.4% higher than a year ago – this is worse than forecast, but in the context of high monthly volatility of these data, this is not a cause for concern.
“We will soon find out how much GDP grew in Q2. In the absence of complete data on services, where sanitary restrictions have been loosened, it is difficult to accurately forecast. It seems, however, that GDP may have increased by less than 12% in this period. / y, and against the first quarter by approx. 3% (rebound),” the economist forecasts.
As Duryash emphasizes, the economy recovering from the “third wave” of Covid-19 generates strong employment growth. Average employment in enterprises increased in June by 21 thousand. posts. The increase in the demand for employees (but also the low reference base from the previous year) is the higher than expected increase in the average wage in enterprises in June (9.8% y / y).
According to a quick estimate of the Central Statistical Office, it reached 5% y / y (0.4% m / m) against 4.4% y / y in June. Fuel prices rose sharply (+ 4.4% MoM). Food prices fell significantly less seasonally than last year, and the prices of energy carriers slightly increased with a drop a year ago. But it can be estimated that net core inflation also increased – probably to 3.6% -3.7% YoY against 3.5% YoY in June.
“The NBP governor has been strongly against rate hikes this year and it is hard to expect anything to change here, although inflation may remain around 5% until the end of the year. The Monetary Policy Council will, however, carefully monitor inflation expectations and the situation in the market. In 2022, the start of a cycle of increases seems inevitable due to the forecast of dynamic GDP growth and inflation remaining close to the upper limit for deviations from the target, with the prospect of continued strong demand growth and the evolution of the labor market towards the “employee market” – concluded the chief economist PZU.
Source: PZU and ISBnews
