Economic Analysis

In today's Eyeopener

- Today MPC decision on interest rates, German production and Hungarian inflation
- Poland’s 2024 GDP growth revised from 2.9% to 3.0%
- The number of foreigners working in Poland rose by 5.5% y/y in April
- Złoty stable, domestic bond yields a bit lower before the MPC decision

The economic calendar for the coming week is rather modest. In Poland, the highlight will be the Monetary Policy Council’s decision on Wednesday and NBP Governor Glapiński’s press conference the following day. On Tuesday, the Sejm begins its session, which includes the first reading of the draft budget bill for 2026. That same day, GUS is expected to publish a revised estimate of GDP for 2024. On Wednesday, Eurostat will release data on services production for July. Abroad, the publication list is sparse, featuring inflation data from Czechia and Hungary, German industrial orders, production and exports. In the US, as long as the government shutdown continues, data from federal agencies will not be released. Midweek, the minutes from the Fed meeting will be published, and on Friday, the University of Michigan consumer sentiment survey will be released. In addition to the NBP, central banks in New Zealand and Romania will decide on interest rates.  (...)

Retail sales are maintaining their upward trend, and we expect this to continue in the coming months. In August, the stats office reported a 3.1% y/y increase in sales, which is only slightly below expectations (3.3% y/y) and below the 4.8% y/y recorded in July. Seasonally adjusted, retail sales rose by a solid 0.7% month-on-month in August. The September business climate survey indicates an improvement in business sentiment across most sectors, which bodes well for economic growth in the third quarter.

Since the publication of our previous report before the summer holidays, the macroeconomic scenario has not changed much. The Polish economy remains on a path of moderate recovery, which should result in GDP growth of 3.5% this year and 3.7% next year. However, the composition of this growth will be slightly different than we had assumed. Due to the protracted delay in spending funds from the RRF, the investment impulse is shifting more and more towards 2026. Nevertheless, we are already seeing early signs of this cycle, in the form of growing investment expenditure by local governments and large companies. This year's slightly weaker-than-expected investment will be offset by stronger household consumption, which, in addition to solid real income growth, is being driven by a credit revival and a normalisation of the savings rate from the exceptionally high level reached last year. (...)

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.