Poland Macro Weekly: Slowly but surely

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TOP MACRO THEME(S):

• Economic growth in 2024 - lower, but still high (p. 2) – We have revised our estimate for GDP growth in 2q24 down to 2.8% y/y. As a result, our full-year forecast has been adjusted slightly, to 3.5% from 3.7%.

 

WHAT ELSE CAUGHT OUR EYE:

• The decline of new industrial orders slowed down in June, to -1.4% y/y from -9.9% y/y in May. Export orders increased slightly, by 0.1% y/y, for the first time since May 2023, indicating a gradual recovery of foreign demand in industry after several months of stagnation.
• The 4q rolling general government deficit after 1q24 decreased to 4.9% of GDP from 5.1% of GDP in 2023. However, the public debt increased to 51.4% of GDP from 49.6% of GDP at the end of 2023. Poland’s deficit is still elevated as compared to other EU countries, mostly due to high military spending. However, Poland's debt remains relatively low. Poland is among eight countries that will be subject to the EU's excessive deficit procedure in 2025.
• The M3 money supply in June increased by 8.4% y/y 8.0% y/y in May. The loan-to-GDP ratio rose to 42.5%, and the nominal value of loans reached the highest level since August 2022, primarily due to a revival in household loans. The loan-to-deposit ratio has stopped declining.
• Business climate indicator in Poland improved in July after a deterioration in June. The strongest improvement was recorded in the best performing sectors: IT and finance. Despite some improvement, industry is still the sector with the lowest economic climate indicator, mainly due to weak foreign demand.
• According to a representative of the Ministry of the Interior and Administration, a large influx of Ukrainians into Poland is possible in autumn and winter, as a consequence of Russia's attacks on energy, heating, and transportation infrastructure. Poland currently hosts app. 970k of Ukrainian refugees.

 

THE WEEK AHEAD:

• CPI in July has likely increased by app. 2pp from 2.6% y/y in June, mainly due to partial unfreezing of energy prices.
• We expect PMI to inch down, following slowdown seen in eurozone.

 

NUMBER OF THE WEEK:

• 4.9% – registered unemployment rate in June 2024, the lowest since 1990.

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