Erste Bank Research Team
Erste Bank
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Investments surprise to upside.
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Governor reconsiders hawkish position.
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Larger deficits in '24 and '25.
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Stable zloty for time being.
The Polish economy continues its robust recovery, achieving a 3.2% growth rate in the second quarter. This growth was primarily driven by private and public consumption, with investments also exceeding expectations. Despite the pro-inflationary nature of this growth structure, inflation surged due to the deregulation of energy prices for households. Consumer prices rose above 4% in July, with an anticipated start of the return to the target only by mid-2025. The budget draft for 2025, which projects a deficit of 5.5% indicates that the pace of government consumption will not decelerate in the near future.
The response of the monetary policymakers has been rather moderate. In recent months, the NBP governor made several hawkish claims but changed the tone during the last press conference. Currently, we anticipate the first key rate reduction to occur around the middle of next year. It appears that the market shares a similar view, as the dovish turnaround from the governor did not unsettle the FX market. We expect the EURPLN rate to remain stable in the medium term. On the political front, both major parties are preparing for the presidential election, scheduled for May 2025.
This document is intended as an additional information source, aimed towards our customers. It is based on the best resources available to the authors at press time. The information and data sources utilised are deemed reliable, however, Erste Bank Sparkassen (CR) and affiliates do not take any responsibility for accuracy nor completeness of the information contained herein. This document is neither an offer nor an invitation to buy or sell any securities.
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