TOP MACRO THEME(S):
- Technical recession and disinflation: New NBP projection shows a significant deterioration in GDP growth outlook for 2023-2024, which implies CPI inflation returns to the target range in 2024, following double-digit consumer prices growth in 2022-2023.
WHAT ELSE CAUGHT OUR EYE:
- One million foreigners have been paying social security contributions in the social security system (ZUS, excl. farmers) at the end of June. 729 thousand of them were Ukrainians, up by 88 thousand since February. According to the labour ministry data, since the outbreak of the war, employers have hired 307 thousand Ukrainian citizens on the basis of simplified procedures. This number should be treated as the upper band of the employment size, and covers all sectors (incl. agriculture). The employment rate of Ukrainian refugees might have already reached 48% (!). The current forced migration from Ukraine has more to do with mobility/circular migration than with a typical refugee flow.
- After months of negative surprises, the BoP for May turned out to be better than expected, with the C/A deficit at EUR 1.9bn vs. EUR 3.5bn in April. The observed improvement in trade imbalance was due to the suspension of gas supplies from Russia, the fall in prices of imported oil and a strong increase in exports to Ukraine (mainly fuel and used cars). The 12m deficit in relation to GDP widened to 3.9% from 3.5% after April. However, the gap is easily financed by the capital account transactions and FDI inflows.
- CPI in June was revised down to 15.5% y/y from 15.6% in flash reading (vs. 13.9% in May). Energy prices grew slower than initially estimated, and food prices slightly faster. Structure of inflation rise did not change - the largest contributions came from fuels (+0.7pp) and energy (+0.4pp). Core inflation rose to 9.1-9.2% y/y with monthly rise of 0.6-0.7%, the least since Dec. 2021, indicating that underlying inflationary pressures are losing momentum.
THE WEEK AHEAD:
- Economic activity indictors for June may show signs of further slowdown, especially in the consumer sector. Labour market data for June should show that average wage growth is not catching up with inflation.
NUMBER OF THE WEEK:
- 1 billion PLN – value of taxes and contributions paid by non-residents working in Poland in 1q22, the highest value on record.