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Monday, November 11, 2024

Trade. A surprise on the market. “Huge negative surprise”

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Weak data from stores clearly surprised economists. – This is a huge negative surprise – admits Łukasz Kozłowski, chief economist of the Federation of Polish Entrepreneurs, in an interview with the tvn24.pl business editorial team. Mariusz Zielonka from Lewiatan notes that this year the driving force of our economy was supposed to be consumption. – If the decline continues until the end of the year, it will have a negative impact on our GDP – he comments.

– Data on the dynamics of retail sales in September, indicating a decline in constant prices by 3 percent year-on-year, are a huge negative surprise – says Łukasz Kozłowski, chief economist of the Federation of Polish Entrepreneurs, in an interview with the business editorial team of tvn24.pl.

It's about reading of retail sales at constant prices in September 2024, provided on Tuesday by the Central Statistical Office (GUS). This results in an annual decline of 3 percent.

– When it comes to the distance between reading data and economists' expectations, it is a record distance – notes Kamil Sobolewski, chief economist of Employers of Poland, referring to growth forecasts of up to 3.4 percent per year.

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Mariusz Zielonka, chief economist of the Lewiatan Confederation, admits that the data “really do not look good.” – However, data for nine months of the year must also be taken into account. Then we have a positive result, i.e. an increase of 2.3%, which shows that retail sales are growing. Although, not as much as we expect, he notes.

At the same time, he adds, this year the driving force of our economy was supposed to be consumption. – If the decline continues until the end of the year, it will negatively affect ours GDP – emphasizes Zielonka.

Flood issue?

Lewiatan's chief economist points out that the decline in retail sales, according to the Central Statistical Office, applies to most regions and most industries, “which does not support hypotheses about one-off factors that would cause this collapse.” – In particular, the impact of the flood that occurred in part of Poland in September, which many economists point out – notes the tvn24.pl interlocutor.

Łukasz Kozłowski, however, estimates that the flood could have been important, but “it is difficult to expect that the impact of this situation on sales dynamics throughout the country would be so strong.”

According to Kamil Sobolewski, the reasons for the weaker results in terms of consumption can be seen in Poles' greater tendency to save. – Since we consume less, it probably means that we have chosen to save money – says the tvn24.pl interlocutor. – And the probable reason for our increased tendency to save is thrift. From this, in my opinion, we can conclude that Poles are preparing for more difficult times. I suppose this preparation is due to the fact that inflation is not under control and that Kowalski felt that the increase in income he sees due to the simultaneous increase in prices is not associated with an increase in purchasing power – he estimates.

– The second hypothesis I pose is that in some industries there are very clear signs of slowdown, economic downturn or even depressed mood, for example in the transport or construction industries – says Sobolewski. – Perhaps the employees of these industries, seeing that the situation of companies that had so far been trying to attract employees and paying high salaries, had deteriorated so much that there was no chance for bonuses or bonuses, decided to save more of their current, still decent income, he says. Sobolewski.

– General uncertainty and consumers' greater tendency to save may be a factor limiting consumption – admits Kozłowski. He adds that the more difficult financial situation of some consumers, resulting from partial frostbite, does not encourage reaching deeper into their wallets when visiting stores. energy prices from the middle of this year and the slowing dynamics of real wages, i.e. taking into account inflation.

Economists also point to the warm September, which meant that we have not yet started replacing our wardrobes with autumn ones, which would explain the declines in sales of clothes, footwear and textiles. – Exceptionally good weather could also have limited the sales of pharmaceuticals, because we had fewer seasonal illnesses. Although their sales were higher throughout the year, it was not as high as usual in the autumn and winter season, says Mariusz Zielonka.

– Another reason, although partial, may be the increased share of purchases of services – he adds. To put it simply, most of our money went to the hairdresser or mechanic.

A temporary slump or a new trend?

According to Mariusz Zielonka, the September retail sales result may just be an accident at work and the following months will not have such serious disadvantages. – Especially in the context of the upcoming All Saints' Day and Christmas – he explains.

Łukasz Kozłowski also points out that at this stage it is not clear whether we are dealing with a significant change in the current trend or just a one-off fluctuation in the data. – We have to wait to draw further-reaching conclusions – notes the chief economist of the Federation of Polish Entrepreneurs.

– There are threats to growth. But cyclically we are rather in a good place. Such data can turn around in one month, so knowing that the threats exist, I would not announce any Armageddon for now – adds Kamil Sobolewski. – The analytical approach suggests that retail sales are one of the more volatile indicators, so at the moment we only have one highly surprising reading. Therefore, it is highly probable that the next reading will be the other way around – he says in an interview with tvn24.pl.

However, as Sobolewski adds, “there are also symptoms that suggest that it may have a deeper root.” This is about a possible downturn in the construction industry, but also a slowdown throughout the European Union, including our main trading partner – Germany.

– These data should be a kind of motivator for our government to remove structural barriers to growth that exist in the economy. Otherwise, the specter of a sharp deterioration of the economic situation may come true – says Sobolewski. – And when it comes true, it will be very difficult to revive this economic situation again – he emphasizes.

Author:Paulina Karpińska

Main photo source: Shutterstock



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