Economic Analysis

In today's Eyeopener:

• Today, German inflation, US new jobless claims
• Households’ saving rate increased to 9.3% in 1Q
• MIK business climate indicator reported slight improvement of sentiment in July
• Zloty stable, local bond yields slightly lower

The main event of the passing week was the unexpected rate cut delivered by the MPC. Though it came two months after the previous one and will likely be followed by another one in September, the NBP Governor does not consider it to be a part of a policy-easing cycle. A new NBP projection was also released and in our view provides motivation for further rate cuts. However, it may be more important at the moment how individual MPC members see it and in the coming week, devoid of significant domestic economic data releases, their remarks may be in focus. Abroad, attention will be focused on the US administration’s decision on the future of the so-called reciprocal tariffs (...) 

The increase in utilisation of EU funds in the first months of 2025 may raise questions how the 2021 – 2027 Cohesion Policy will affect sales of business loans. To answer this question we have analysed the relationship between EU funds and bank loans as sources of business funding. Our results suggest that EU funds and bank loans are complementary sources of funding and that an increase in the volume of signed contracts for EU funding by PLN1bn corresponds to an increase in the volume of sales of business loans by c. PLN0.5-0.6bn.

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.