CASE Highlights
Trade, Innovation, and Productivity
Both business climate[1] and consumer sentiments[2] in Poland have improved slightly this month. As the recent data from Statistics Poland suggests, current consumer sentiments have increased by 0.5 pp m/m (58.9 pp y/y) in April, which is primarily due to a slight improvement in the evaluation of economic situation in Poland and financial situation of the households (by 1.8 pp and 1.5 pp m/m, respectively). A similar positive trend could be noticed in seasonally adjusted business climate indicator for manufacturing sector which reached -7.0 in April – a 0.8 pp improvement compared to last month and 40.2 pp y/y. Wholesale trade that has already reached positive values in the previous months further improved to 3.4 in April (1.5 pp m/m and 42.2 pp y/y increase). At the same time, extension of lockdown restrictions throughout the country seems to have negatively affected business climate in retail trade and accommodation and food service activities with both deteriorating by 1.4 pp m/m and 10.6 pp m/m, respectively. As the survey data confirms, companies in accommodation and food service activities are particularly affected by the lockdown measures as 89% of them report that the negative effects of the pandemic have “serious” impact on the business activity in April or are “a threat to company’s stability” (compared to 36% on average for other sectors). Further, only 12.4% of businesses in accommodation and food service activities think they could survive more than 6 months if the current restrictions are maintained (compared to about 54% on average for companies in other sectors).
Despite a significant rebound since 2020, both indicators remain well below the pre-pandemic levels of 4.8 and 6.8 seasonally adjusted business climate indicator for manufacturing sector and wholesale, respectively, and 7.2 consumer confidence indicator reported in April 2019.
Labour Market and Environment
According to the Diagnosis Plus (D+) survey, the unemployment rate of around 7.6% (8.4% if people not looking for work are considered) was recorded in January 2021 in Poland, compared to, respectively, 6.9% and 7.7% in October 2020. The increase in unemployment in 2021 is related to the further intensification of the Covid-related economic restrictions in the country. The D+ survey showed that those out of work during the pandemic period are much more committed to looking for work compared to those out of work in normal times. Among those without a job, about 75% would like to work (normally about 16%). Moreover, 40% of people without a job are actively looking for one (normally about 9%). The largest increases in the number of unemployed persons occurred in large urban centres – by more than 30% on average.
Macro and Fiscal
On April 14, the European Central Bank published “Report on the public consultation on a digital euro”. The objective of the consultation, which ran from October 12, 2020 until January 12, 2021, was to follow on the previously published by the Eurosystem “Report on a digital euro” and to collect the views of the public opinion in eurozone. The main finding from the consultation is that most citizens consider privacy and security of transactions as the most important feature of a digital euro. With over 8,200 respondents the survey provides useful inputs for the ongoing legislative work on the digital euro. The decision from ECB on the possible launch of a digital euro project is expected in mid-2021 but, regardless of the announcement date, digital currency in the eurozone will shake the foundations of the financial system.
[1] Measured as a difference in the percentage of entrepreneurs that expect improvement of their entities’ economic situation in the next three months and the percentage of entrepreneurs expecting its deterioration.
[2] Measured as a difference in the percentage of consumers that expect improvement in the household's financial condition, changes in general economic situation of the country, and currently made major purchases and the percentage of consumers who expect deterioration in these areas.
