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January’s robust retail sales hard to replicate in remainder of 2012


Although the rate of retail sales growth accelerated significantly in January, it should be remembered that the surge was primarily due to a low comparative base and more working days compared with a year earlier. Just as in December 2011 retail sales growth was held back by an unusually high base of comparison (in the closing weeks of 2010 there was a rush of advance buying by Poles to avoid higher VAT rates or less favourable VAT treatment of certain items as of 1 January 2011), so in January 2012 sales growth was helped by related base effects, namely a low level of sales in early 2011. While strong increases were registered in all branch specialisations, the biggest increase occurred in sales of motor vehicles, motorcycles and parts, i.e. the category most severely affected by last year’s slump (the coming into force of new, less favourable VAT rules pertaining to company cars led to a collapse in car sales in January 2011). Also, the steep nominal increase in sales of fuel reported in January was driven in large part by higher prices. Particularly noteworthy are the 20% y-o-y increase in sales of furniture, radio, TV and household appliances, which confirms that Poles’ propensity to spend remains strong; and the accelerated growth in sales of food, beverages and tobacco products.

Though there are no clear signs as yet of an economic slowdown in Poland, our view is that it will be extremely high to replicate such strong retail sales increases in the latter part of the year. With the eurozone crisis far from resolved and with weak growth prospects for most European economies, one should expect a gradual weakening of economic activity in Poland in the months ahead. Furthermore, the fiscal consolidation measures being implemented by the government in order to meet deficit reduction targets set forth by the European Commission will also have a negative impact. We forecast that GDP growth in Poland will slow to about 3% this year. Under such a scenario the economy is unlikely to produce a significant number of new jobs, and much of wage growth will be cancelled out by persistently high inflation and spending cuts in the public sector. As a result, the real wage bill in the national economy will increase at a slow rate, and so will the society’s purchasing power. And while the Euro 2012 is likely to give an extra boost to consumption in the second quarter of the year, a high base of comparison and tougher access to credit as of January mean that in 2012 as a whole retail sales at current prices will grow by 6.2%, according to our forecasts.

Paweł Sionko
Construction Market Analyst, PMR

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