MACROscope

The return of Donald Trump to the Oval Office with the Republicans simultaneously taking over the Senate and retaining control of the House of Representatives signals major changes to the world economy and geopolitics. What these changes will exactly entail is hard to foresee, as one of the trademarks of the president-elect is his unpredictability. However, given his earlier statements, the initial reaction of the financial markets to his victory seems to have been rational, as the dollar strengthened against the euro, emerging market currencies – especially the Mexican peso and the CEE currencies – depreciated, the yields on US Treasuries rose, and the yields on German bunds fell. The size of these initial responses was, however, limited which suggests that market participants remain unsure as to what the actual policies of the new administration will be (...)

In August, global financial markets went through a short-lived but quite sharp correction, driven by renewed fears of recession in the US, triggered by weaker labour market data. In our assessment, the baseline scenario for the global economy is still a soft landing: a mild and controlled deceleration in the US, a slow recovery from the bottom in the euro area, a structural slowdown in China. (...) Despite the challenging external environment, the Polish economy is reaccelerating in line with the scenario we have been predicting for a long time. In 2Q24 Poland recorded the fastest GDP growth in the entire EU and was the only country in the CEE region to surprise with a positive result, showing great resilience to the protracted downturn in Germany. (...)