Economic comment

Today’s conference of the NBP president Adam Glapiński was exceptionally short and to the point, and in our view flagged another shift in the central bank’s narrative, again towards more hawkish one. Just like in months preceding his dovish pivot in April, Glapiński was downplaying news which were positive for the inflation outlook, while emphasizing all possible risks on the horizon. He acknowledged slight decrease of CPI inflation to 4.1% y/y in April, yet underscoring that it remains “well above” the inflation target.  He also noticed a reduction of gas tariffs since July, admitting that inflation may near 3% in 3Q25, but at the same time pointed that such scenario is still subject to large uncertainty and listed risks that could worsen inflation outlook in the medium term. (...)

1Q25 GDP growth has been confirmed by the stats office at 3.2% y/y and 0.7% q/q on a seasonally adjusted basis. The big surprise positive was investment, which rose 6.3% y/y (our forecast was -2.0% y/y). Private consumption was up 2.5% y/y (we expected 2.7% y/y). The foreign trade balance subtracted 1.1 percentage points from GDP growth, while inventories added 1.5 percentage points. We believe the GDP will gradually accelerate in the upcoming quarters, increasingly supported by the recovering investment cycle, with entire 2025 at 3.4%.

In April, Polish retail sales in constant prices recorded a growth of 7.6% y/y against market consensus of 3.4% y/y and our 2.8% y/y forecast. The strong data came after two months of negative, sub-consensus prints. The April retail sales reading may generally make the MPC less inclined to deliver rate cuts this year and push back the timing of when the next monetary easing will occur. We do not rule out that the MPC will consider a 25bp cut in July when the new NBP staff projection will be available but at the same time we have growing doubts that the MPC might postpone the delivery of the rate cut until after the summer holidays. According to the preliminary results of the Labour Force Survey, the unemployment rate rose in 1Q25 to 3.4% form 2.8% in 4Q24 and 3.1% a year before. Gross financial result of non-financial enterprises employing 50 or more persons equalled PLN53.3bn in 1Q25 and was 13.9% higher than in 1Q24. Their investment outlays declined 3.6% y/y in 1Q25.