The full publication is available in a PDF file. Download here

Detailed forecasts and data can be found in an Excel file. Download here

Macroeconomic scenario

Economic growth

In Q2 2024, economic growth positively surprised with a 3.2% yoy reading. However, it wasn't private consumption that was the source of this surprise – as one might suspect given the rapid wage growth – but rather investments, which unexpectedly rose by 2.7% yoy after a 1.8% decline in the previous quarter. We don't believe that this rebound in investments has sustainable foundations. The declining construction output contradicts this. Therefore, we maintain our forecast of 3.0% GDP growth for 2024, with a negative contribution from investments.

Inflation

At the beginning of the second half of the year, CPI jumped above 4% yoy due to the partial unfreezing of electricity and gas prices for households. In the rest of the year, inflation will move close to 5%. In turn, core inflation has already passed its minimum in this cycle (3.6% yoy in June), slightly faster than our previous expectations. In the coming months, it will remain persistent (especially in the services sector) - we should expect its gradual increase, but it will not be a dynamic process. At the beginning of 2025, we assume a further sharp hike in inflation (to about 6% in the first quarter), among others due to the further unfreezing of energy prices and low reference base. We will not return to the inflation target range quickly. In our opinion, this will only be possible in 2026.

Fiscal policy

2025 budget bill turned out to be slightly more fiscally expansive than we anticipated. We expected a deficit of 4.9% of GDP, while the bill assumes 5.5% of GDP. However, this does not mean that there will be a significant fiscal stimulus next year. The larger budget gap is primarily due to increased spending on defense and public investments (e.g., the nuclear power plant) rather than raising social transfers. We believe that the high borrowing needs in 2025 (PLN 366 billion compared to PLN 252 billion in 2024) will continue to exert pressure on the rise of Polish debt yields, but we do not expect the government to encounter difficulties in financing them.

Monetary policy

There has been a slight dovish shift in Polish monetary policy, which can be observed in the statements of the members of the Monetary Policy Council (MPC). President A. Glapiński, at the conference following the September MPC meeting, mentioned the potential resumption of interest rate cuts in the middle of next year. He also outlined the conditions that must be met for this to happen: stable current inflation and a forecasted decline in inflation towards the NBP target. However, the list of uncertainties that could affect the realization of this scenario is long and dominated by factors that support higher inflation. While interest rate cuts next year are not out of the question, they are not our baseline scenario.