By Gareth Jones
WARSAW, Jan 26 (Reuters) - Christmas gave a larger than
expected boost to Poland's retail sales last month, data showed
on Monday, but unemployment rose and analysts said they still
expected another sizeable interest rate cut this week.
Retail sales data from Hungary and comments by the Czech
central bank governor reinforced a mood of deepening gloom
across the once-booming ex-communist region as its key export
markets in the euro zone succumb to recession.
Retail sales in Poland, the European Union's biggest
ex-communist member, rose 6.6 percent year-on-year in December,
up from November's 2.7 percent, and above a forecast of 5.6
percent. They grew 20.2 percent on the month.
However, statistics office data also showed unemployment at
9.5 percent, above forecast and up from November's 9.1 percent
as the impact of a financial crisis and much tighter credit
markets filters through to the real economy.
"One should not be over-optimistic because although retail
sales came in above forecasts, unemployment is rising and this
will negatively impact sales in the future," said Monika Kurtek,
economist at BPH Bank in Warsaw.
Kurtek said she expected the central bank's Monetary Policy
Council (MPC) to cut rates by 50 basis points when it meets on
Tuesday, a move also predicted by a Reuters poll late last week.
Some analysts say the MPC could repeat its December rate cut
of 75 basis points.
"We expect rates to fall to 3 percent (from the current
level of 5 percent) by the end of June," said David Hauner,
emerging markets strategist at Bank of America in London.
"However Poland's economy remains more resilient than many
of its smaller neighbours as exports remain a smaller part of
the economy," he added.
Poland's growth is seen at about 5 percent in 2008 and may
slow to 2 percent this year. The Polish statistics office will
release its preliminary growth estimate for 2008 on Jan. 29.
REGIONAL TREND
Hungary, in the grip of a more serious downturn after being
compelled to seek an emergency IMF bailout last autumn, saw a 2
percent year-on-year drop in its working day-adjusted retail
sales in November, data showed on Monday.
In the first 11 months, retail sales were 1.9 percent lower
compared to the same period a year ago, according to the Central
Statistics Office in Budapest.
Czech central bank governor Zdenek Tuma said economic growth
in his country could be close to zero in 2009.
"The (previous) forecast talked about growth this year at 3
percent. Now we know that this was too optimistic," Tuma told
Polish daily Rzeczpospolita in an interview.
"We also have an alternative scenario, in which growth is
close to zero due to the recession in the economies of our main
trade partners. I believe we will be able to maintain a little
economic growth," he said, adding the central bank's new growth
forecast would be released in February.
The downturn threatens to drive up the region's budget
deficits, hampering its preparations to join the euro zone.
The Czech finance ministry has drafted a revision to the
2009 state budget that anticipates the deficit could hit double
the approved level, minister Miroslav Kalousek said on Sunday.
The EU allows its member states to run deficits of up to 3
percent of gross domestic product, though a number of euro zone
member states are expected to break the limit this year.
Tuma said in his interview he believed 2013-2015 was a
realistic timeframe for Czech euro adoption. Poland is targeting
2012, though most economists expect some delay.
Finance Minister Jan Pociatek of Slovakia, which adopted the
euro this month, was quoted as saying on Monday that Bratislava
would revise its 2009 economic growth forecast downwards to near
the 2.7 percent predicted for it by the European Commission.
(Reporting by Warsaw, Budapest, Prague and Bratislava bureaux;
writing by Gareth Jones, editing by Patrick Graham)
