In Q2 2023, the growth of retail sales in CEE reflected starkly different economic situations. This result both underscored the challenges and demonstrated the opportunities for the region. Poland and Croatia saw some of the largest year-on-year jumps in retail sales. In stark contrast, Slovakia battled the last vestiges of past stockpiling and inflationary burdens. This data underscores the challenges inherent in getting a clear read on our complicated retail environment as conditions keep changing daily.
Romania’s retail sector returned to more positive form during June – sales growth rebounded back up to +1.1% m/m which was +2.5% y/y. Yet, this expansion marks the weakest yearly rate of growth seen in over a year-and-a-half. The slower rate of growth may reflect a broader trend of consumer caution amidst rising prices and economic uncertainties.
Slovakia Struggles with Negative Growth
Slovakia’s retail sales growth is still very deeply in negative territory largely owing to the base effects of stockpiling seen last year. This practice, coupled with continuing consolidation efforts that have led to price increases, has hurt consumer spending as well. Because of this, the Slovak retail market remains an underdeveloped case, at least compared to its neighbors.
Analysts suggest that without significant interventions or shifts in consumer behavior, Slovakia may struggle to regain positive growth in the near future. Now the release of June industrial production and trade data are just days away. This story will provide insight into the economic environment affecting retail sales trends.
Positive Trends in Czechia and Poland
Czechia’s retail sales growth showed remarkable stability through Q2, buoyed by the strength of household demand. The country benefits from a wide range of positive labor market conditions. With advanced economy nations experiencing low unemployment rates and high real wage growth, spending power has increased in tandem. Moreover, increased consumer sentiment and expectations have been key to maintaining Czechia´s retail sales growth.
In late 2021, retail sales in Poland experienced an enormous uptick. Annual growth leapt from the modest 1.4% in Q1 to an impressive 4.7% in Q2. The huge gains of April played a big role in moving this improvement way up. The timing of Easter celebrations made an important impact since they usually boost springtime consumer spending. The effect of seasonal factors outweighing these deficiencies and Poland’s underlying economic resilience have conspired to make it one of the star performers in the region.
Croatia and Serbia Show Mixed Signals
Retail sales jumped Croatia in June, recording an impressive 7.5% growth compared to last year. It was this robust performance that accelerated the apparently surprising overall growth for Q2. This month’s increase is a sign of a strong consumer picture and a positive harbinger of market conditions to come in the next few months. Smart market observers will be keen to watch if this momentum can be sustained as the economic picture shifts over time.
Serbia’s central bank surprised absolutely no one when it decided to leave interest rates on hold, matching market consensus. This decision bolsters a hawkish line on monetary policy in the face of ever-changing economic indicators. Hungary is due to report its July inflation numbers imminently. These gigantic numbers truly have the ability to alter the retailing landscape within the entire region going forward.