Economic Analysis

In today's Eyeopener:

- Today core inflation data for March, GDP revisions for the past two years
- March CPI inflation confirmed at 3.0% y/y and 1.1% m/m
- The budget deficit increased by PLN21.1bn m/m in March to PLN69.6bn
- Further gradual appreciation of the zloty, a slight rise in bond yields and market rates

The coming week will be relatively light in terms of economic data releases. Global markets’ attention will be focused on how negotiations on ending the war with Iran are progressing, but just after the weekend the number one topic will most likely be the outcome of the elections in Hungary. Opinion polls have for many weeks pointed to a growing lead of the opposition TISZA party, but the outcome is not a foregone conclusion, as the ruling Fidesz party can count on a number of electoral system regulations working in its favour and possibly also on a late-stage mobilisation of its electorate.

In Poland, balance of payments data for February will be released on Monday, followed on Wednesday by final March CPI inflation data. On Thursday, core inflation figures will be published along with the annual revision of quarterly GDP data for the past two years. (...)

The revision of GDP data raised the 2024 growth rate to 3.2% from 3.0%, while the full‑year 2025 outcome remained unchanged at 3.6%, although the estimate for 4Q was slightly revised up by 0.1 pp to 4.1% y/y. The upward revision stemmed primarily from a higher estimate of investment – according to Statistics Poland, investment increased by 0.4% in 2024 and by 4.4% in 2025 (previously estimated at ‑0.9% and 4.3%, respectively). In addition to investment, inventories also contributed to the upward revision, while net exports were revised downwards in most periods, deepening their negative impact on GDP.
These changes do not materially affect our existing economic growth forecasts.

In mid‑March we published a report outlining three scenarios for the development of the economic outlook, depending on how prolonged and severe the commodity shock triggered by the war in Iran would prove to be. Three weeks later, we can conclude that the first scenario, which we had then considered the most likely, turned out to be overly optimistic, and the baseline scenario is shifting towards scenario number two: the conflict does not escalate further, but prolonged uncertainty and the damage already inflicted on infrastructure mean that commodity prices may remain at least 15–20% above their February levels for most of this year. Recent reports about an agreement on a two‑week ceasefire are interpreted by us as a clear signal that neither the US nor Iran is interested in further escalation or a prolongation of the war. (…)