Economic comment

The draft budget for 2026 assumes continuation of Poland's accommodative fiscal policy, with a general government (GG) deficit of 6.5% of GDP, compared to 6.9% of GDP this year (...) The draft budget for 2026, along with the estimated realisation in 2025, once again places Poland on a fiscal trajectory that is worse than previously expected. In our opinion, this will not trigger a harsh reaction from the European Commission, which in its assessment focuses primarily on the spending path (which does not exceed agreed targets). The greater uncertainty is the reaction of the rating agencies. In our opinion, the risk of a deterioration in the rating outlook in subsequent updates has increased, although a downgrade still seems very unlikely to us as long as rapid GDP growth continues.

GDP growth in 2Q25 accelerated to 3.4% y/y, in line with flash estimate published in mid-August. However, the structure of growth came as a surprise, revealing much higher than expected consumption growth and a renewed decline in investments after a very good result in Q1. We assume a further moderate acceleration in economic growth, with the delay in the absorption of funds from the RRF most likely meaning that most of the investment momentum will be shifted to next year. From the central bank’s point of view, today's data is another argument in favour of caution in further monetary policy easing.

In July, retail sales were stronger than expected, rising by 4.8% y/y, compared to our and market expectations of 3.5% y/y and June's result of 2.2% y/y. The improvement was mainly driven by sales of durable goods, in supermarkets and clothing stores. (...) According to the financial results of non-financial enterprises, gross profit declined slightly year-on-year in 2Q, with a slight increase in profitability from 4.3% to 5.3%. Investment growth, after five quarters of decline, recorded a positive result. Investment expenditures increased thanks to transport and information and communications, while they remained weak in manufacturing.