Economic Analysis

In today's Eyeopener

- Today July’s PMI, we are expecting a slight rebound
- Polish CPI went back to the tolerance band around target, but surprised to the upside
- Inflation remained low in Germany, US data without surprises
- Strong rise in mortgage loan origination
- Weaker zloty and higher bond yields

Lack of market-sensitive data on domestic market. However, on Friday, we will see data on average wages in the national economy in 2Q25. Despite the previously expected slowdown in wage pressure, the enterprise sector data indicate that wage growth remains quite similar to the beginning of the year. We expect the 2Q25 reading to be close to 10% y/y.
More is happening abroad. On Monday, we will get to see US data on June durable and industrial goods orders. On Tuesday, the PMI for services in the US, as well as in China, Germany, and the eurozone. July inflation in the Czech Republic and Hungary will also be released in the following days.
On Wednesday, August 6, there will be a change of scenery at the Presidential Palace – Karol Nawrocki is scheduled to be sworn in as President of the Republic of Poland at 10:00 CET.

Retail sales slowed to 2.2% y/y in June from 4.4% y/y in May, surprising to the downside (us: 4.6% y/y, market: 3.9% y/y). Detailed data show a rather disappointing performance of sales of durable goods. Yet the disappointment in June came after stronger than expected data for April-May. We generally remain sanguine about the consumption outlook, given a strong growth in real wages and improving consumer confidence, and we think that the underlying trend remains solid, which should be reflected in a steady consumption expansion, around 3% y/y this year.  

The July business tendency survey conducted by GUS does not change the current assessment of the economic situation. The overall economic climate in most industries remained similar to recent months, with a slight deterioration in retail trade and the accommodation and catering sectors, while improvement in transportation and storage.

The Polish economy has returned to a path of over 3% economic growth, which we believe is likely to continue in the coming quarters. We maintain our GDP growth forecast for this year close to 3.5%, and for next year we even foresee a slight acceleration to 3.7%. This is a more optimistic scenario than the consensus, motivated, among other things, by our moderately constructive view of the outlook for the eurozone economy and our conviction that the domestic investment cycle is only just taking off and is slightly lagging earlier expectations, so that its greatest momentum will come in 2026. (...)

In September's Rates and FX Outlook:
 

• Poland’s GDP growth failed to accelerate in 2Q16, with investments surprising negatively (-4.9% y/y), and we think that the second half of the year will see no significant improvement in economic growth. Although private consumption is likely to gain strength in the coming quarters, supported by solid labour income and the new child subsidies, it may take time until investments recover, and the positive impact of net exports will be hard to maintain (export growth may decelerate and imports accelerate). We expect a more significant investment pick-up next year, but by then the impact of the 500+ child benefit programme on consumption will be dissipating. Therefore, we forecast that GDP will grow 3.1% in 2016 and 2.9% in 2017.