Economic Analysis

In today's Eyeopener:

- Today, preliminary estimates of German and French inflation for February
- ESIs for Poland and the euro area moved lower in February, but remain at solid levels
- Markets unsettled by US–Iran negotiations; the zloty and domestic 2Y bonds under pressure

The coming week in Poland will be sponsored by letters: PMI, GDP and the MPC. On Monday morning, we will see the February reading of the manufacturing PMI. (...) An hour later, Statistics Poland (GUS) will release detailed GDP data for 4Q25. (...) On Wednesday, the Monetary Policy Council will conclude its meeting. Before taking its interest rate decision, the Council will see the results of the new NBP projection. We assume that the MPC will decide to cut interest rates again by 25bp, in response to the slight decline in CPI inflation in January and to the projection results, which will most likely confirm the stabilisation of inflation in the coming quarters close to the 2.5% target . (...)

In January, retail sales in constant prices increased by 4.4% y/y, down from 5.3% y/y in December, outperforming expectations (market: 3.1% y/y, our forecast: 2.0% y/y). Seasonally adjusted data showed a fourth consecutive positive m/m increase (0.5%). Unlike industrial output and construction and assembly production, the severe winter did not have a clearly negative impact on retail sales. Sales of durable goods in constant prices slowed to 2.4% y/y, while sales of other goods accelerated to 4.8% y/y.

In European industry we are seeing signs of a recovery, suggesting that domestic exporters may enjoy a modest tailwind this year, not least due to the acceleration of the German economy. Domestic data confirm rising activity across most sectors. Demand for credit is clearly increasing. We continue to expect solid consumption growth to be maintained and a strong acceleration in investment. On the other hand, an exceptionally harsh winter is generating additional costs for household and local government budgets, which over time may weigh on their spending, while delays in the disbursement of funds from the Recovery and Resilience Facility mean that even the government is now pointing to the risk that grants may not be fully utilised. As a result, we keep our GDP forecast for this year broadly unchanged, with average growth at 3.9%. (...)