Key events in EMEA next week

Industrial output: 4.4% year-on-year (January)

Industrial output continues to hold up better than expected, with the energy crisis in Europe being less severe than previously feared. There are no gas shortages and European industry is able to operate, which is supporting export-orientated Polish manufacturing. A higher number of working days compared to January 2022 also boosted the annual output figure. Nevertheless, conditions in manufacturing have deteriorated over the last few months and activity should be subdued in the months ahead.

PPI inflation: 17.9% YoY (Jan)

The global disinflationary trend is visible in Polish PPI inflation, where a turnaround is clearly visible. Pressure from energy commodities has abated, whereas it was strong in January 2022. As a result of the high reference base, annual PPI inflation started moderating in the fourth quarter of 2022 and rapid disinflation in producers’ prices is projected in the first half of this year.

Retail sales (real): 1.5% YoY (Jan)

The annual growth of the retail sales of goods has nearly stalled in recent months as high prices weigh on real disposable incomes of households and hamper spending. Despite additional demand from refugees from Ukraine, purchases weakened markedly in late 2022 and will remain under pressure in the first months of 2023 as wage growth is unable to catch up with retail price growth.

Unemployment rate (registered): 5.5% (Jan)

Despite weakening economic conditions, the labour market is holding up well and unemployment remains close to all-time lows. Despite the expected upswing in January, the scale of increase in the number of unemployed is estimated to be rather moderate by historical standards.

In the previous Monetary Policy Committee (MPC) meeting, the Central Bank of Turkey removed its forward guidance which stated that the current policy rate is adequate considering risks to global demand. While this attracted the attention of market participants, we do not expect any change in the policy rate at the February MPC meeting, and see it remaining flat at 9%.