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Will the second wave of the crisis hit the labor market?
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On Thursday afternoon, October 15, the Prime Minister Mateusz Morawiecki and Health Minister Adam Niedzielski “will present further actions in connection with the development of the pandemic” – announced Michał Dworczyk, head of the Chancellery of the Prime Minister, in the morning on TVN24. The conference will take place after the meeting of the crisis team and after information on new, detected coronavirus infections is provided. The same minister Dworczyk suggested that let’s see a new record and this record was broken – 8099 cases, in two voivodships – Mazowieckie and Małopolskie – over 1,300.
Coronavirus. The government is preparing new restrictions?
More than 100 poviats may already be in the red zone, including large cities (this in turn was announced by the press spokesman of the Ministry of Health). For now, it includes Grudziądz, Sopot, Piotrków Trybunalski, Suwałki, Kielce and Koszalin, and from the latest data on infections it can be concluded that they will be joined by, among others Warsaw. A working calculation of one of the observers of official data on infections appeared on Twitter. These calculations show that more than 150 poviats may fall into the red zone – this raises questions whether the whole of Poland will not become one (just like the previous week).
RMF FM reports, citing its information, that all large cities are to be included in the red zone. For this over 300 thousands of people are in quarantine. Not all of them are employees who cannot do their job work remotely, but some of them certainly do.
So we already have a small lockdown. With slight restrictions so far, but it seems certain that they will be widened. According to unofficial reports and economists’ speculations, the potential list may include the closure of some schools (older children and teenagers), restrictions on mass and family events (weddings), and restrictions on shops and restaurants. The possibility of introducing further restrictions is supported by the latest CBOS study, which shows that there are more supporters of such activities. And decisions that are inconvenient for citizens are easier to take with greater social acceptance for them (and then there is probably a greater chance of their effectiveness).
Experts do not expect a full lockdown, such as in spring, at this point, but this does not mean that there will be no impact on the economy. And economists write about it directly.
Pandemic, restrictions and GDP
mBank compared the restrictions introduced in spring with those in force now, which may be a clue as to which restrictions will be reintroduced now.
According to the bank, however, the government will focus heavily on making the impact of such restrictions on the economy as small as possible, and closing entire industries, as was the case during the first coronavirus wave, is unlikely to be. “We believe that the approach to restrictions will continue to be focused on surgical activities (targeting specific activities, industries and regions), and not mass-scale” – write economists.
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However, even such surgical, limited restrictions will have an impact on consumers. First, it is real: with restrictions on events and other “non-work” activities, we will spend less. “Nevertheless, consumers and companies will again cut their spending amid a new wave of uncertainty. As we do not expect strong effects, we keep our growth forecast for this year unchanged. Black clouds gather over 2021 as the increased wave of infections, restrictions and self-limitation will take time. probably a few months (less severe constraints -> the need to maintain them longer, longer wait for the effects). In the current situation, we would aim for growth closer to 4 than 5 percent. – mBank forecasts. “The economic effect will be visible, you have to prepare for a poor start in 2021” – he points out in a Twitter entry from Thursday morning.
Other bank economists also expect the coronavirus pandemic to put a greater strain on the economy in the fourth quarter and weaken next year’s rebound. Pekao SA emphasizes that the second wave appeared earlier, and the related restrictions will have an impact on economic activity.
In the current, fourth quarter, PKB will shrink compared to the third quarter of this year. “Annual dynamics in Q4 will decline towards -4%.” – experts write. This means lowering previous expectations, which was pointed out by the chief economist of Pekao SA in a recent conversation with Next.gazeta.pl.
“We maintain our forecast – that is a GDP decline of 2.4% this year -. In the fourth quarter alone, however, the economy will retract, in our opinion, the year-on-year decline will amount to 2%, and from what can be seen now, the risk for This quarter they are down. First of all, the effects of anti-crisis shields materialized in the second and third quarter, now they are fading away. In the coming months, however, we expect a deterioration of the labor market situation, although the Polish labor market is positive in comparison to the European background ” Ernest Pytlarczyk explained.
PKO BP, in turn, writes that “the increase in the number of coronavirus infections in the last few weeks puts into question the further course of the economic recovery from the pandemic bottom”.
According to the economists of the largest Polish bank, there will be no repeat of such a hard economic landing and the economic slowdown will be smaller than in spring. However, there is uncertainty, especially as to how the behavior of consumers and companies will evolve. PKO BP emphasizes that how strongly Poland’s GDP will feel the second wave depends on three factors:
1. What will the situation in the world look like, especially in Europe. It influences foreign demand, and this demand is, as PKO BP points out, “one of the main engines driving the process of rebuilding the domestic economy”. For now, there is no risk of closing the borders, which could harm Polish exports.
2. The impact of infections and restrictions on the mood and behavior of companies and consumers. Large banks keep track of our card purchases and on this basis they can infer a change in our spending attitude. According to PKO BP data, there is currently a flattening of expenses, but a clear, almost exponential increase in coronavirus infections may “scare” consumers so that they will limit purchases and start saving, just like companies.
3. Direct impact of subsequent restrictions on the economy. The current (as of Thursday morning) red zones, i.e. the areas where restrictions are the most severe, cover an area inhabited by about 9 percent. and which is responsible for about 5 percent. Polish GDP. “This does not mean, however, that the creation of such a part of the national GDP is significantly endangered. The current restrictions have a marginal direct impact on the activity of the most important industries,” emphasizes PKO BP. According to the bank’s economists, the most important thing now is to maintain activity in industry and construction. Industries such as tourism, gastronomy and cultural and recreational services, which will be hit hardest by the likely new restrictions, account for a small share of the GDP value added.
PKO BP maintains its GDP forecast (a decline of 3.3% year on year in the fourth quarter and 2.9% throughout 2020), but points out that the balance of risk “is becoming asymmetric downwards”.
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