Poland Macro Weekly: Stay on these roads

TOP MACRO THEME(S):

Will the MPC stay the course? – While there are some doubts whether the Polish MPC will stay the course and continue rate cuts, we believe that the political change in Poland (or any other factor) has not altered the reaction function of the country’s monetary authorities (at least for the time being). We expect another 25bps rate cut at the MPC meeting on November 8. This time we will get new NBP projection for GDP and inflation, with a horizon extended to 2026 for the first time.

WHAT ELSE CAUGHT OUR EYE:

Flash data showed CPI inflation at 6.5% y/y in October vs 8.2% y/y in Sep.
Manufacturing PMI in October increased to 44.5pts from 43.9pts. While output fell the most since November 2022, 12m outlook for production was the brightest since 2022 pointing to a likely recovery of the industrial sector.
ESI indicator for Poland rose to 97.0pts vs 95.6pts reflecting an improvement of economic conditions in all sectors as well stronger consumer confidence.
According to the Labour Force Survey, the number of persons working in the grey economy in 2022 stood at 342k against 538k in 2017, and accounted for 2% of working population. Informal employment most often concerned renovations and construction, installation repairs, gardening and agricultural works, transport services, as well as child or elderly care.
Ministry of Finance informed that as of the end of October this year's borrowing needs have already been fully met and the degree of pre-financing of gross borrowing needs in 2024 amounted to 5%.

THE WEEK AHEAD:

Apart from the MPC decision accompanied by new NBP projections there will be no major economic events locally next week.

NUMBER OF THE WEEK:

8.06bn PLN – estimated costs for the banking sector of the so-called ‘mortgage loan holidays’ assuming full participation in 2024 (estimates by the Ministry of Economic Development and Technology).