Correction of housing prices? Well, it’s possible, but it is unlikely to be as protracted as in 2008-2013. The mid-term outlook for Poland’s housing market remains relatively bright despite the pandemic gloom. There are substantial differences in the fundamentals of the market between now and the global financial crisis that triggered deep and long-lasting correction in prices.
GDP drop continued in 4q20 (p. 4): Last quarter of last year saw another drop in activity amid the second wave of the pandemic and restrictions that depressed domestic demand (both consumption and investments). Exports remained a bright spot.
Registered unemployment rate in January rose to 6.5% (from 6.2% in Dec., +1pp y/y), in line with seasonal pattern. The number of unemployed rose by 44k - the smallest incraease for January since 1997. LFS unemployment rate in 4q20 fell to 3.1% (vs 3.3% in 3q20), while the number of employees increased by 0.5% y/y. Labor market has been effectively hibernated by public support. Assuming a robust recovery in 2h21 (our basecase scenario), the ‘moment of truth’ for the labour market will come in May-June when the no employment change condition for support from the Anti-crisis Shields will expire.
MinHealth announced the return to stricter restrictions in warminsko-mazurskie region (north-east of Poland, approx. 4.2% of population; 2.5% of Poland’s GDP) with shopping malls closed again at least until mid-March.
State budget in January recorded a surplus of PLN 6.6bn (vs. PLN3.4 bn in Jan 2020) with a two-digit PIT and CIT revenues’ growth rates (partially reflecting an expiry of delayed tax payments from 2020). With expenditures reduced by 7.7% y/y, this signals a good shape of the state budget with a space for a positive fiscal surprise in 2021, given our baseline macro scenario.
Manufacturing PMI in February most likely headed north again (same as in Germany), indicative of K-shaped recovery (strong demand on goods vs. weak demand on services) and with bottlenecks looming on the horizon (supply chain disruptions due to winter and on trade route with Asia and the UK).