Erste Bank Research Team
Erste Bank
On the radar
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Industrial output growth in Poland accelerated to 7.9% y/y in April.
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Nominal wage growth remained solid at 11.3% while employment declined by -0.4% y/y in April.
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In Hungary, nominal wage growth was at 13.9% y/y in March.
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Producer prices in Poland declined by -8.6% y/y in April.
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Today, retail sales growth in April will be published at 10 AM CET.
Economic developments
There are many studies linking the size and development of a country's capital market to its economic performance. As we show in today's chart, there appears to be empirical evidence supporting this proposition also in the EU. On the vertical axis, we have ordered countries based on their GDP per capita (PPP) from the best to the worst performing. The Nordic EU countries, as well as France and the Netherlands, carry on the regression line. Zooming in on the CEE region, none of the countries stands out in terms of their market capitalization. The largest equity markets are in Austria and Croatia, both at 28% of GDP, followed by Slovenia and Poland with market caps at 23% and 22%, respectively. By far, the smallest capital market is in Slovakia, with a size of only 2% of GDP. Boosting the capital market could provide necessary funds for the development of various sectors of the economy, especially as many countries in our region need to catch up with the rest of the EU, not only in terms of GDP per capita.
Market developments
On Tuesday, the MNB Monetary Council cut the policy rate by 50 basis points to 7.25. Neither the press conference of the Deputy Governor Virág nor the statement of the council provided any new information on the monetary policy outlook. The end of the ongoing monetary easing cycle is approaching. In Poland, the MPC member Duda said that if central bank is going to start monetary easing it would be gradual. She sees possibility of rate cuts only in 2025. Since the beginning of the week, the CEE currencies have weakened marginally against the euro while long term yields remain slightly higher.
This document is intended as an additional information source, aimed towards our customers. It is based on the best resources available to the authors at press time. The information and data sources utilised are deemed reliable, however, Erste Bank Sparkassen (CR) and affiliates do not take any responsibility for accuracy nor completeness of the information contained herein. This document is neither an offer nor an invitation to buy or sell any securities.
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