Economic Analysis

In today's Eyeopener:

- Today, the NBP’s November “Inflation Report” will be presented
- In the evening S&P will release its credit rating assessment for Poland
- Among macroeconomic data, we will learn about 3Q25 wages and August service production
- Adam Glapiński: the level of interest rates is almost ideal, easing by 150pp is very significant
- No major changes in the FX market, slight increase in bond yields

The highlight of the current week will be this evening’s decision by S&P regarding Poland’s credit rating. We expect that, as in the case of Moody’s and Fitch, S&P will downgrade the outlook without changing the rating itself. The new working week, although shortened by Independence Day, will provide a solid dose of insights into the Polish economy, concentrated on Thursday (first estimate of GDP growth in 3Q25, September balance of payments) and Friday (details of October inflation). We will probably also hear comments from further MPC members (following today’s L. Kotecki) on the Council’s latest decision. (...)

In connection with the progress on the digital euro, as well as the global developments related to digital currencies, we explain in this text what central bank digital currencies (CBDC) are, why central banks are working on them, and what their issuance may entail. We explain that the innovativeness of CBDCs stems from their status as a widely accessibly digital payment instrument which is simultaneously a central bank liability. We also clarify that central banks are working on CBDCs in order to maintain the relevance of public money in an increasingly digital economy. Finally, we argue that even though issuing a CBDC may lead to an outflow of deposits from the banking sector, the actual impact of CBDC on the banking sector will depend on the CBDC’s design and need not be negative.

Despite the high volatility in high-frequency economic data, the trend of the domestic economy appears to remain moderately positive. Our forecasts suggest that after disappointing August publications, September data will show a clear improvement across most indicators. This will be partly due to calendar effects and an exceptionally weak base – recall that in September 2024, the domestic economy was dealing with the aftermath of floods and a difficult-to-explain collapse in retail sales data. Nevertheless, even after adjusting for these effects, we should see signs of further gradual improvement in economic conditions. GDP growth in 3Q (the preliminary figure will be released in mid-November) is likely to accelerate again to 3.6–3.7% y/y, confirming that the full year may close with growth near 3.5%, possibly with a slight upside risk. (...)

In September's Rates and FX Outlook:
 

• Poland’s GDP growth failed to accelerate in 2Q16, with investments surprising negatively (-4.9% y/y), and we think that the second half of the year will see no significant improvement in economic growth. Although private consumption is likely to gain strength in the coming quarters, supported by solid labour income and the new child subsidies, it may take time until investments recover, and the positive impact of net exports will be hard to maintain (export growth may decelerate and imports accelerate). We expect a more significant investment pick-up next year, but by then the impact of the 500+ child benefit programme on consumption will be dissipating. Therefore, we forecast that GDP will grow 3.1% in 2016 and 2.9% in 2017.