Poland: no rating upgrade and dissapointing labour market and activity figures
In our opinion Standard & Poor’s is unlikely to upgrade their rating or perspective. The agency should highlight better fiscal and external positions as both the budget performance and current account balance strongly outperformed their forecasts. On the other hand, clashes with the European Commission, a still wide structural deficit and long-term challenges (such as demographic problems) are likely to be used as arguments against any improvement.
Looking at upcoming data, both the labour market and activity figures should disappoint in March. We see a slight deceleration of enterprise wages to 6.6% year-on-year. The growth trend that was visible in the second half of 2017 has stagnated within the majority of sectors. Secondly, we expect sub-consensus industrial production (1.5% YoY) and construction output (10.6% YoY), reflecting a bit of softer external demand and public investments outlays.
Hungary: wages expected to grow rapidly
In Hungary, we are facing a relatively quiet week with only one important piece of hard data. Wages are expected to grow rapidly on the back of the raised minimum wages, wage settlements and the mounting labour shortage. Moreover, we might see a higher than usual premium and bonus payments in the public sector.