Poland needs solid retail sales for its economy to recover, and the September figures are a serious cause for concern, reads a report from Citi Handlowy. If the numbers for October also disappoint, it says the macroeconomic scenario for 2025 will have to be reconsidered.
“The real test will be the publication of October data, for which we have to wait another four weeks. Looking at the sales performance in previous years, usually after very poor results there are results better than expected (negative autocorrelation). If this is the case, the September data will go down in history as a source of great, but only short-term fear. If October brings disappointment, it will give grounds to rethink the scenarios for 2025,” wrote Citi Handlowy economists.
Last week, the Central Statistical Office reported that retail sales for September 2024 fell 3 percent year-over-year, while estimates had called for an increase of 2.2 percent. The miss was even more of a concern since nominal wages in Poland are still growing at a high, double-digit rate, although in real terms, i.e., adjusted for inflation, growth slowed slightly to 5.4 percent year-over-year.
Noting consumption as the primary driving force of the Polish economy, the analysts at Citi Handlowy claim that all forecasts are based on this, which is why last week’s exceptionally weak retail sales have raised the alarm.
“Although sales are a variable indicator, such a big surprise happens exceptionally rarely,” they wrote.
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“The main question that needs to be answered is to what extent the new data is a sign of a trend, and to what extent it is simply information ‘noise’ that can be safely ignored. Ignoring data or depreciating its quality is never a good solution for an analyst, because denying reality will not change the situation in the economy. The problem, however, is that there are many reasons to approach the picture painted by new data with skepticism,” they added.
