Economic Analysis

In today's Eyeopener:

- Today January data on labour market, activity in industry and construction
- In February, consumers assessed better their current situation, but lowered expectations a bit
- MF expects investment growth of 10-11% in 2026
- EURPLN still between 4.21 and 4.22, no significant changes in Polish bond yields

After January inflation, which fell by less than expected to 2.2% y/y, the coming week will bring the release of further domestic January data. On Thursday, figures for wages and employment in the enterprise sector, industrial and construction output, and PPI will be published. This may be a series of rather weak-looking indicators, especially when compared with the very strong December readings. Economic activity at the start of the year was significantly disrupted not only by calendar effects (one fewer working day than a year earlier) but also by an exceptionally harsh winter. We discuss the potential implications of winter conditions for the economy in a commentary published today (link). As a result, we expect (in line with market consensus) a slowdown in the growth of output and wages. Such readings should help sustain expectations of an NBP interest rate cut in March, which were dented by today’s higher-than-forecast inflation print. (...)

January’s economic data turned out weaker than our already rather pessimistic assumptions. Downside surprises were seen both in indicators of real activity (industrial and construction output, employment) and in nominal figures (wages, PPI inflation). In our view, the poor January performance largely reflects one-off factors (a smaller number of working days, a holiday calendar conducive to long weekends, a very low average temperature in January of -4.3 ℃ compared with +1.8 ℃ in January 2025, as well as snowfall), which does not undermine the positive medium-term trend. This is evidenced, among other things, by still solid and even improving optimism surveys among consumers and businesses. We therefore expect a rebound in the coming months, although February will still be affected by harsh weather conditions. In our opinion, the data released today increase the likelihood of an interest rate cut at the Monetary Policy Council’s upcoming meeting in March.

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%. (...)