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Macroeconomic scenario

Economic growth

Q3 economic data generally surprised to the downside, suggesting that consumers still had high propensity to save, investments remained in doldrums and industry continued to face insufficient demand. According to our estimates, GDP slightly decelerated from 3.2% yoy to 3.0% yoy. We keep our 2024 forecast unchanged, expecting the economy to grow by annual average of 3% with negative contribution from investment.

Inflation

In September, CPI jumped to almost 5% yoy due to the partial unfreezing of energy prices and a low reference base. Inflation will remain close to 5% until the end of the year. Core inflation has already passed its minimum in this cycle and will remain persistently high in the coming months (especially in the services sector). Its gradual increase should be expected, but it will not be a dynamic process. At the beginning of 2025, we assume another hike in CPI (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 quickly. In our opinion, this will not be possible before 2026.

Labour market

The deterioration of the labor market is a fact, but its pace and course will not satisfy the MPC. While the weakness in employment visible since the beginning of the year has been confirmed by an increase in the number of unemployed in recent months (we believe this is partly due to minimum wage increases and mass layoffs in some sectors), nominal wages have barely slowed down. Wage growth will remain in double digits until the end of the year. In 2025, the average salary will grow by 8-9% yoy. Currently, we do not see any indications that wages in Poland return a "normal" growth rate (6-7% yoy).

Monetary policy

There has been a noticeable dovish turn in Polish monetary policy, which can be observed in the statements of MPC members. The NBP President A. Glapiński spoke at the conference after the October Council meeting about the potential start of the interest rate cut cycle in 2Q25. He also outlined the conditions that must be met: stable current inflation and a forecasted decline in inflation to the target. However, a list of risks for the implementation of this scenario is long and dominated by factors favoring higher inflation. In our opinion, the macro situation will not be conducive to a rapid pace of monetary policy easing. However, we revise our earlier forecast of no rate cuts until the end of 2025 and now we expect cuts by a total of 100 bps starting in March.