CEE Macro Weekly: The devil is in the details

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TOP MACRO THEME(S):

• The devil is in the details (p. 3) – we present a summary of updated quarterly forecasts for Poland.

WHAT ELSE CAUGHT OUR EYE:

• POL: Retail sales in August increased in real terms by 3.1% y/y, following growth of 4.8% y/y in July, slightly below expectations (cons.: 3.6% y/y, PKOe: 4.1% y/y). The deceleration in sales may have been linked to calendar effect (the number of trading days was lower than in 2024). In nominal terms, sales rose by 3.1% y/y, while the implied “deflator” remains around zero.
• POL: Moody’s has maintained Poland’s credit rating at A2 (one notch above Fitch and S&P) but revised the outlook to negative from stable. The agency cited a deteriorating outlook for the deficit and public debt, driven by political deadlock between the government and the President as well as rising pre-election spending ahead of 2027. Moody’s now forecasts a general government deficit of 6.8% in 2025 and 6.6% in 2026, with public debt reaching 65% of GDP in 2026 and exceeding 70% by the late 2020s. This marks a significant shift from earlier projections, which assumed deficit reduction sufficient to stabilise the debt ratio below 60% by 2027. At the same time, Moody’s emphasised that Poland’s creditworthiness is underpinned by strong economic growth, continued income convergence towards the EU average, and limited external imbalances. The rating also reflects heightened geopolitical risks linked to the war in Ukraine and reduced US engagement in Europe, although NATO membership and enhanced self-defence capabilities remain important anchors. The downgrade of the outlook, which follows a similar move by Fitch, had been anticipated. Importantly, fears that Moody’s might also lower the rating itself — aligning it with Fitch and S&P — did not materialise.
• POL: The registered unemployment rate increased to 5.5% in August from 5.4% in July, though this primarily reflects changes in labour office procedures rather than underlying economic conditions. Since June, deregistrations from unemployment have been lower, following the relaxation of certain requirements for registered jobseekers (e.g. the removal of the obligation to confirm availability for work). At the same time, positive seasonal effects are evident in the decline in new registrations. The harmonised unemployment rate, calculated by Eurostat, has so far remained stable at 3.1% in July — one of the lowest levels in the EU
• POL: New industrial orders in August were 2.9% higher than a year earlier, with growth accelerating from 2.5% y/y in July. The year-on-year improvement was driven mainly by domestic demand. Export orders, however, continued to grow at a slower pace, rising by 0.7% y/y in August compared with 1.3% y/y in July.

THE WEEK AHEAD:

• Poland’s CPI inflation for September (to be released on Tuesday) is likely to rise above 3% y/y. Also on Tuesday, the next estimate of 2q25 GDP growth in Czechia will be published. On Wednesday, Poland’s manufacturing PMI will be released.