WOOD Flash – CE4/Greece macro: the consumption recovery – pivoting from necessities to discretionary

In this flash note, we provide an overview of the retail spending results released last week. All countries in the CE4 and Greece are showing improvements, but the pace of this normalisation remains, in most cases, constrained by a still evident gap between what appears to be a goldilocks backdrop of high real wages and low unemployment, and the reality of constrained purchasing power and lingering concerns about the direction of the economy, notwithstanding the low unemployment rate. This divergence between what “appears” and what “is” is the starkest in Greece, and the least severe in the Czech Republic. In addition, the bulk of consumption this year remains driven by income dynamics: households are constructive about the economic outlook and have increased their savings buffers, so they are heading into releasing some pent-up demand. Looking into 2025E, we expect improvements to continue, but they will depend increasingly on the unfolding monetary easing and a recovery in export volumes emerging from 3Q this year.