Polish assets will benefit from high rates, despite geopolitics
Macrocompass for July and August 2024 - our macroeconomic forecasts, preview of monthly data readings and the expected scenario of events on the financial markets.
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Macroeconomic scenario
Economic growth
In Q2 2024, Polish GDP grew by 2.8% yoy – according to our forecast. Despite the fact that hard data in recent months have been rather disappointing (e.g. retail sales in April and industrial production in May), the first quarter of the year has shown that consumer activity is focused more on services than goods. Therefore, we expect a solid GDP reading. It is supported by an increase in the purchasing power of households. Investments, on the other hand, are still falling due to the cyclical nature of EU funds. We did not see any signs of their rebound so far. Therefore, we maintain the opinion that in 2024 growth will amount to a moderate 3.0% yoy and will be driven only by consumption. In 2025 the growth will accelerate to 4.3% yoy – when it will be supported by investments from the EU Recovery Plan.
Inflation
The current stay of inflation around the NBP target is short-term and has just ended in June. From July, the shape of the inflation path will be strongly affected by the partial unfreezing of energy tariffs for households. The Energy Regulatory Office has finally revealed its cards and the bill for both electricity and gas will increase by about 20% on average, which will instantly raise inflation by almost 1.5 percentage points to 4% yoy. At the end of 2024, inflation will be near 4.5% yoy. Core inflation, on the other hand, will converge to its minimum in this cycle to about 3.5% yoy in the coming months. High wage growth along with the growing economic recovery will bring us closer to a rebound in core inflation, but it will not be a dynamic process.
Monetary policy
Inflation is rising again. Although mainly due to regulatory reasons (the return of VAT on food and the unfreezing of energy prices), the fundamental inflationary pressure is also intensifying. This does not escape the attention of the MPC, which consistently maintains a hawkish message. At today's meeting, it will not change rates and will maintain the distant perspective of monetary policy easing (H2 2025).
Dear Readers, the next issue of MacroCompass will be released in September.
This publication (hereinafter referred to as the ‘Publication’) prepared by the Macroeconomic Analysis Department of Bank Polska Kasa Opieki Spółka Akcyjna (hereinafter referred to as ‘Pekao S.A.’) constitutes a commercial publication and is for information purposes only. Nothing contained herein shall form the basis of any contract or commitment whatsoever, in particular it shall not constitute an offer within the meaning of Article 66 of the Civil Code. The publication does not constitute a recommendation provided within the framework of investment advisory services, investment analysis, financial analysis or any other recommendation of a general nature concerning transactions in financial instruments, an investment recommendation within the meaning of Regulation (EU) No 596/2014 of the European Parliament and of the Council of 16 April 2014 on market abuse or investment advice of a general nature concerning investment in financial instruments, and the information contained therein cannot be regarded as a proposal to purchase any financial instruments, an investment or tax advisory service or as a form of providing legal assistance. The publication has not been prepared in accordance with legal requirements ensuring the independence of investment research and is not subject to any prohibitions on the dissemination of investment research and does not constitute investment research.