Financial markets didn’t digest yet fatal data on economic growth for the third quarter, and already there were indications that the fourth may be even worse. All the key data for October showed a deterioration of the economic situation.
The least detrimental to the report published on Monday applies to retail sales, the annual growth rate was indeed the lowest in July, but the scale of the disappointment was not large. In constant prices, sales continued to grow in October by a solid 4.5%, but in the period August-September was 6.9% per annum. Still, therefore, cannot be seen here combined effect of a remarkable increase in real incomes and transfers from 500+ program, which suggests that a large part of the extra income is saved. However, problems are greater at the front of production. The dynamics of industrial production for the second time this year, is in the red and we cannot dump this on seasonality. Especially in recent months, a similar negative trend was seen in the PMI index, which looks very bad on the background of Germany and our partners in the Visegrad Group. Everywhere we note increase in industrial activity. What is interesting today also appeared the report of the Bundesbank, which promises strong acceleration of growth at our Western partners economy in the current quarter.
In addition , a terrible signal flows from the data on construction output. Already in the third quarter, it recorded a decline of over 18% per annum, which must translate into a very large decline in investment growth (not yet know the details of the report on PKN for the period July-September). Given that in the fourth quarter the importance of investment is very high this can mean a decline in economic growth of up to 2%, which would mean an average annual growth of only 2.6%. Certainly part is related to changes in the perspective of EU spending and the expenditure will show partly in the future. However, looking at the deterioration in the industry in the context of improving in the neighboring countries , we may have concerns that at least some slowdown is due to other factors.
Unfortunately, puzzles of economic slowdown is not the only problem. Another is concern about the fiscal path, which in the discussion of retirement age is pushed into the background. About their importance, however, reminded the representatives of Moody’s, the agency that has the highest assesses of the credibility of the Polish government. Concerns about increased spending, especially in the context of the economic slowdown, may result in downgrade during the January 2017 survey. Already on December 2 over the Polish economy will lean a rating agency S&P, which remains at BBB + outlook negative.
This is not the best mix of information from the point of view of the zloty, which can be particularly sensitive to bad news because of the situation on the global markets. Sale-of on the global bond market affected in particular the emerging markets and already had time to have a negative impact on quotations of our currency. The course is held in check only by the pretty good mood on the global stock markets, which limits the scale of capital outflow. Now, however, the risk of a larger shot EURPLN above 4.50 seems to be the highest since the euro-crisis
dr Przemyslaw Kwiecien
