Page 22 - bne monthly magazine October 2022

22 I Companies & Markets bne October 2022
The NBP might be expressing hope that the economic slowdown will trounce inflation eventually – via weakening credit demand and Poles’ propensity to shop – but that alone may not be enough, ING writes.
“The energy shock is so powerful that companies will continue to pass costs onto product prices, even in times of economic downturn,” ING Bank Slaski’s chief economist Rafal Benecki wrote.
The analyst adds that the Polish government is also poised for a large budgetary expansion in 2023 in line with an EU-wide trend of the authorities striving to defy the effects of Putin’s gas war on Europe.
“This is a reasonable approach, but in Poland we already have a very expansive policy mix and the side costs in the form
of persistently high inflation may be higher than in other countries,” Benecki said.
Such a scenario – which boils down to stagflation – is a solid premise to expect no more hikes, even if the NBP appears in no position to declare so verbatim, according to PKO BP.
“The MPC will maintain the data-driven mode,” PKO BP said
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Romania expects €200mn from 5G licenses in 2022
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The terms for the 25-year radio licenses for the construction of 5G communication networks, expected to generate revenues of nearly €700mn to the budget over a five-year period were approved by the Romanian government on September 14, after final discussions between the National Communications Regulatory Authority (ANCOM) and the main bidders – Orange, Vodafone, RCS&RDS Digi and Telekom Mobile.
The budget revenues are expected at just over RON1bn (€200mn) this year and over RON2.5bn in the first five years, according to the estimated impact included in the substantiation note sketched along with the government decision.
After the latest round of discussions, the telecom operators convinced ANCOM to sweeten the terms of the contract,
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in a comment, adding that further rate hikes could come if there is “a strong and permanent weakening of the zloty or a further heating of the labour market, symptoms of which we do not see so far.”
Oxford Economics said this week that nominal wage growth in Poland might stay strong, which could keep inflation higher for longer. This would keep assets under pressure and force the central bank to maintain a tight stance,
or risk a weakening of the zloty or damage to economic competitiveness, hurting medium-term growth prospects. It says the central bank is currently "struggling to re-anchor inflationary expectations”.
If it halts further rate rises, the NBP would join Czechia’s central bank CNB in its dovish stance. The CNB kept its key interest rate unchanged at 7% in early August, making it the first bank in Emerging Europe to halt the tightening cycle.
In contrast to Poland and the Czech Republic, neighbouring Hungary’s central bank NMB delivered another solid hike
– this time of 100bp – to bring its base rate to 11.75% in late August, continuing the bid to fight surging inflation, which could hit 20% at the end of the year.
probably the most important being the 30% reduction of the radio spectrum usage tariff, which will translate into lower costs paid by the telcos.
However, the telecom companies were no longer granted access to preferential electricity prices, under the latest form of the “cap and subsidy” scheme aimed at protecting some economic sectors and households from unusually high energy prices.
The telecom operators have complained that this would result in fewer investments. The telecom operators
are expected to invest some €2bn in developing 5G infrastructure, including the fees paid to the government.
The government’s decision to no longer protect the telecom sector from high electricity prices is estimated to cost the companies some €300mn.