Poland Macro Weekly: Growth is back

TOP MACRO THEME(S):

On the way to growth in the CEE (p.2) – In 3q23 economic conditions in the CEE countries remained diversified with annual economic growth recuperating in Poland and (somewhat) in Hungary, amid accelerating annual GDP growth in Romania and further contraction in Czechia.

WHAT ELSE CAUGHT OUR EYE:

CAB in Sep. amounted to 394 mn EUR, which translated into a 0.6% GDP surplus on a 12m rolling basis. For the first time since Sep. 2021 a 12m rolling basis surplus was recorded for trade in goods, which mirrors 9 consecutive months with a surplus on a monthly basis. In our opinion, this is not the end of the improvement in external balance – at the end of 2023 the CAB surplus should exceed 1% of GDP.
European Commission’s forecast assumes that GDP in Poland in 2023 will grow by 0.6% and accelerate to 1.2% and 1.6% in 2024 and 2025. The EC expects HICP inflation to drop to 11.1% in 2023, to 6.2% in 2024 and to 3.8% in 2025. The forecast implies that in 2024 inflation in Poland will be the highest among the EU countries. We underline that – contrary to our scenario - the EC forecast assumes the least favorable scenario regarding energy and food prices (i.e. termination of protective measures at the end of 2023).
The final estimate by Statistics Poland showed that inflation in Oct. fell to 6.6% y/y from 8.2% y/y in Sep. Core inflation fell to 8.0% y/y from 8.4% y/y in Sep. The preliminary estimate showed Polish economy expanding by 0.6% y/y after 2 quarters of contraction. The result is consistent with our scenario of a gradual economic recovery (more details on p.2).
Fitch Ratings affirmed Poland's rating at A- with a stable outlook.
The NBP has published a schedule of the MPC meetings in 2024.

THE WEEK AHEAD:

A set of monthly data on economic activity in October will be published (details in the calendar on p.6). We bet that in all 3 sectors (retail, industry, construction) the activity will be (finally) growing in yoy terms.

NUMBER OF THE WEEK: