Poland Macro Weekly: As good as it gets

TOP MACRO THEME(S):

Year-end economic revival (p.2) - Monthly data indicates an acceleration of GDP growth in4q23, but somewhat weaker than we have estimated so far (2.4% y/y). GDP growth forecast for 2024 stays unchanged at 3.9%.

WHAT ELSE CAUGHT OUR EYE:

General government deficit has deepened to 5.4% of GDP after 3q23 from 4.7% after 2q23 (4q-rolling sum). Public debt in 3q23 increased to 48.7% of GDP from 48.3% and remains low against the background of other EU states. Taking into account data for 3q23, our full-year forecast of general government deficit at 5.9% of GDP may be too pessimistic and the final result may be slightly better (FinMin suggested a gap below 5.6% GDP). We still expect that fiscal deficit will remain high in 2024 (at 5.6% GDP). The public debt-to-GDP ratio will likely go up to approx. 50% at the end of 2023 and 52.7% GDP in 2024.
M3 money growth in Dec. was stronger than expected and accelerated to 8.5% y/y (against 7.6% y/y in Nov.). Annual growth rate of PLN mortgage loans improved to 2.2% y/y from 0.8% y/y in November, following negative levels since November 2022. M1 real growth (cash and demand deposits) was slightly positive constituting another sign of economic recovery.
President A.Duda will sign the budget act for 2024 without undue delay, on the dates that oblige him to do so. Minister of Finance A.Domanski said that the amendment of this year's budget is possible, but the Ministry of Finance must first conduct a review of income and expenses.
PM D.Tusk said that Poland received a proposal from Ukraine for a construction of a toll highway from the border crossing in Krakowiec to the city of Rivne through Lviv.

THE WEEK AHEAD:

Statistics Poland will publish flash estimate of GDP in 2023, which we estimate at 0.6% with some downside risk stemming from relatively weak data for December (see p.2). Meanwhile, manufacturing PMI may regain some of the surprising loss in December.

NUMBER OF THE WEEK: