Economic Analysis

In today's Eyeopener

- Today: GUS Statistical Bulletin and flash March PMIs for the euro zone
- Retail sales up by 5% y/y in February, rebound in large-company investment in 4Q25 
- Higher-than-expected rise in money supply, pickup in lending in February
- Market optimism after Donald Trump’s declaration of a halt in attacks on Iran

The economic data calendar for the coming week will be rather light. In Poland we will receive February data on retail sales and money supply (Monday), unemployment and the monthly GUS Statistical Bulletin (Tuesday).
Our retail sales growth forecast (4% y/y) is clearly below the market consensus median (around 6% y/y). The forecast is based on an analysis of card payment data from our bank’s clients - which in recent months have provided a fairly good indication of retail sales developments. If this proves correct, the figures would add to the set of arguments for the MPC not to rush its monetary policy response to commodity price swings - slowing wage and consumption growth would reduce the risk of so called second round effects. In any case, any monetary policy changes before July seem highly unlikely at this point. . (...)

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. (...)