In January 2025, Poland's economic landscape is showing promising signs of a positive shift, fueled by a resurgence in household spending. The data indicates that savings accumulated in 2024 are now bolstering consumption growth, despite the challenges of slowing wage increases and lower pension indexation. Although January's mixed German IFO data and cautious market mood pose challenges, the outlook for private consumption remains optimistic for the first quarter of 2025.
The retail sector in Poland experienced a significant boost in January, with sales of goods rising by an impressive 4.8% year-on-year (YoY). This figure far exceeded expectations, surpassing ING's forecast of 2.0% and the consensus estimate of 1.5%. Retail sales data reflect a noteworthy shift in consumer behavior, as Polish consumers demonstrate increased willingness to spend on durable goods, contrasting with the trends observed in 2024.
Car sales showed remarkable growth, surging by 21.9% YoY, indicating a robust demand for automobiles. Clothing and footwear sales also rebounded with an 8.8% YoY increase, recovering from a 12.2% YoY decline in December. However, food sales remained relatively subdued, experiencing only a modest 0.6% YoY growth, likely due to rising prices affecting consumer purchasing power.
Despite these encouraging developments, the GBP/USD currency pair retreated from previous multi-month highs and traded below 1.2650 on Monday. This decline comes as the US Dollar's recent fall pauses amid anticipation of speeches from several Bank of England policymakers. Meanwhile, in the United States, more attractive repo rates and the anticipated appreciation of bills have captured investors' attention.
Poland's consumption growth trajectory is expected to maintain momentum in the coming months, with estimates suggesting an acceleration to 3.5% YoY in the first quarter of 2025, compared to 3.2% YoY in the fourth quarter of 2024. Achieving this growth rate will likely require households to dip into their savings from last year, given the constraints posed by slowing wage growth.
The revival in consumption follows a surprising downturn experienced in September 2024, likely caused by widespread flooding that impacted economic activities. January's data indicates a recovery, with durable goods sales rebounding after a year-long decline in 2024. This rebound signifies renewed consumer confidence and a willingness to invest in durable goods.
While the Polish economy demonstrates resilience through increased consumer spending, challenges remain on the horizon. The cautious mood in global markets and mixed signals from Germany's IFO data suggest that uncertainties persist in the broader economic environment.