Economic Analysis

In today's Eyeopener

- German export and Hungarian inflation slightly below forecasts
- Spending of RRF budget rising systematically
- Weakening of CEE currencies, slight increase of Polish bond yields

The coming week will be very quiet in terms of new data releases. The domestic calendar is virtually empty, while abroad we’ll see, among others, Germany’s foreign trade data, industrial production in selected European countries, as well as Czech, Hungarian and German inflation for November.
The atmosphere should be enlivened by the publication of our MACROscope report with updated forecasts for 2026, which we plan to release at the start of the week.
Global markets’ attention will focus on the last FOMC meeting of the year (...)

NBP president Adam Glapiński kept the door open for further monetary easing at today’s conference. He said the MPC is now likely to enter a wait-and-see mode to observe the situation for some time, but then it may resume cutting rates, if the data allow.

The next central bank’s decisions will remain strongly dependent on the new data and next NBP projections. Glapiński said his own view is quite conservative and he would be happy with maintaining the current 4.0% reference rate (which is “perfect”) for a longer period, but other MPC members may prefer to cut interest rates a little more, possibly to 3.75-3.50%. (...)

Recent positive data from the domestic economy have sparked a wave of optimism about the prospects for economic growth in Poland. For us, this optimism is nothing new. We wrote about the fact that the coming years would be marked by strong investment growth and that 2026 would be better than 2025 in terms of GDP growth before it became trendy. At the same time, it is worth bearing in mind that these will not be easy years, free from uncertainty, and that the acceleration in domestic growth will be moderate rather than spectacular. In our opinion, the increasingly popular slogan ‘GDP at four plus’ will materialise more likely in the form of nominal GDP level exceeding PLN 4 trillion, rather than in the form of average real GDP growth for the entire year above 4% (although this may not be far off) (...)

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.