Poland’s real economy data deteriorates in October, GDP likely to grow 2 pct in Q4

Poland released further disappointing data yesterday after posting disastrous GDP data for the third quarter, which has made the 2017 outlook quite uncertain. The October data for retail sales and industrial output surprised markedly on the downside. Poland’s industrial output fell 0.9 percent month-on-month in October, with heavy industries such as chemicals and capital goods leading the fall. Within retail sales, car sales turned out to be a major disappointment.

The data implies that Poland’s headline GDP growth might come in as low as 2 percent year-on-year in the fourth quarter, said Commerzbank in a research report. The Polish economy is likely to expand 2.4 percent in 2016 and 2.7 percent in 2017.

If this had been a normal cycle, the National Bank of Poland would have soon started easing rate again. However, the central bank might cut rates later mainly due the hawkish views on the Fed. The Polish zloty is expected to depreciate in order to compensate for the lack of monetary policy options. According to Commerzbank, EUR/PLN pair is likely to trade at around 4.50 by the second quarter of 2017.