Page 12 - Poland Outlook 2020

4.0​ Real Economy
• Retail
There is very little to indicate that the Polish retail sector will suffer any major slowdown in 2020. Poles are likely to spend only a bit less, as the effect of hefty government handouts like the 500+ child benefit wears off and some sense of more uncertainty ahead settles in. But anything more than just incremental weakening of retail dynamics would be a major surprise.
The near-universal 500+ is only a part of the story. The fundamental driver behind Poles’ spending more money across all retail sectors from food to durable goods to cars is the labour market. Unemployment is hovering around just 5%, the lowest in three decades. At the same time, with millions of Poles abroad - an effect of the labour market’s crisis in the late 00s and early 10s of the 21st century - the labour force has shrunk considerably, pushing up wages.
Wages in the national economy grew steadily around 7% y/y in Q1-Q3 while growth in the corporate sector came in at 5%-6% y/y every month, data from the stats office GUS showed last year.
In 2020, wage growth in the enterprise sector will continue to decline slightly along with slowing economic activity, analysts say. These expectations are also in line with central bank NBP’s findings based on surveying companies. Alos, the expected spike in inflation in Q1 is not forecast to add much to wages’ growth. What will reduce the scale of the slowdown in wages’ expansion will be, however, the planned strong increase - by 15.6% - in the minimum wage that kicked in from January.
“Although the general consumer confidence indices slightly decreased in Q4 this year, the propensity for consumer spending remains high. In 2020, we expect a slight slowdown in private consumption, due to a slowdown in disposable income dynamics, rising inflation and halting unemployment drops,” Bank Millennium wrote.
• Banks
The long-time spectre of the authorities pushing for a quick fix of the problem of CHF-denominated mortgages that are a significant part on assets sheets in
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