Economic Analysis

In today's Eyeopener:

• March Michigan survey results due today in the US
• Polish government announces a package of measures to cut fuel prices
• Zloty stable, announcement of government intervention in fuel prices steepened the yield curve

In the final week before Easter, we will continue paying closer attention to oil and gas prices than to the prices of eggs and butter. Donald Trump has extended the suspension of attacks on Iran by another 10 days, but this has failed to calm either commodity or financial markets, which remain concerned about the security of energy supplies in the coming months. Polish drivers will be closely watching the fate of a government bill allowing for a temporary reduction in fuel taxes, which should be sent to the President for signature in the coming days.

In the calendar of domestic economic releases for the coming week, there are only two key items: the flash CPI inflation reading for March and the manufacturing PMI. Our estimates suggest that CPI inflation rose in March to 3.1% y/y from 2.1% in February (...)

In February, retail sales at constant prices increased by 5.0% y/y, marking an acceleration from 4.4% y/y in January. The market had expected a reading of 6.1% y/y, while our forecast stood at 4.0% y/y. Sales of durable goods rebounded to 4.8% y/y after a weak January reading of 2.4% y/y. Sales of other goods rose by 5.0% y/y, compared with 4.8% y/y in January. If the conflict in the Middle East de-escalates relatively quickly, average real retail sales growth this year could reach around 4%, in our view.
In 4Q25, revenues of large and medium-sized companies increased by 3.0% y/y, while costs rose by 2.5% y/y. The four quarter average margin edged slightly higher (to 4.6% from 4.5% in 3Q). Investment by large and medium-sized companies in 4Q25 showed a clear acceleration to 8.8% y/y from 2.9% y/y in 3Q in real terms. Sectors more dependent on EU funding saw investment growth accelerate to 16.2% y/y from 14.2% y/y, while in the remaining sectors it improved to +6.3% y/y from -2.6% y/y.

This was supposed to be a very good year for the Polish economy, with GDP growth close to 4%, the peak of the investment cycle, resilient consumption and a strong labour market, inflation stabilising close to the NBP’s target, and slightly declining interest rates. We still see a chance that this scenario will materialise, although its success depends to a large extent on how persistent the disruption in commodity markets triggered by the US-Israeli attack on Iran proves to be. Since the beginning of the decade, the global economy has been fighting one battle after another, grappling with, among other things, the global pandemic, the energy crisis, rising geopolitical instability, a wave of economic protectionism, volatility in financial markets, and now a severe disruption in commodity markets. (...)