Poland Macro Weekly: Summer dovish transformation

TOP MACRO THEME(S):

Are interest rate cuts closer than they seemed? (p. 2) – The MPC stays within the wait-and-see mode. While the post-meeting press release has hardly changed, the tone of the NBP Governor’s press conference was significantly more dovish.

WHAT ELSE CAUGHT OUR EYE:

August reading of the PMI index surprised on the upside increasing to 47.8 pts from 47.3 pts in July. The outcome reflected mainly shallower declines in output, new orders and employment. Price pressures continued to ease both with regard to inputs and final products. Outlook for 12m was the brightest in 6 months although below the long-run trend.
Statistics Poland published data on the median wage in the national economy, which in March 2024 equaled 6,549.22 PLN, constituting approx. 76% of the average wage, with about 30% of workers earning monthly pay close to or above the average. Women’s and men’s earnings behave differently over the course of the professional life cycle – men's earnings increase until the age of 35-44, after which they decrease. For women, the highest median wage was recorded in the 55-64 age group, with smaller differences between age cohorts compared to men.
The government has adopted amendments to the act on the revenues of Local Government Units, which are expected to provide local governments with additional PLN 345 bn over the next 10 years. These changes include modifications to the revenues of local governments from PIT and CIT, which will now be calculated as a percentage of taxpayers' income from these taxes within the area of the respective local government. The net effect of the reform for the entire public sector is expected to be neutral.

THE WEEK AHEAD:

The full estimate of the CPI for August should provide more details on which food categories contributed the most to an upward deviation of monthly price dynamics from the seasonal pattern. Current account balance in July may deteriorate amid the weakness of exports and higher growth in imports. Both CPI and CAB will be published on Friday.

NUMBER OF THE WEEK:

PLN 2 bn – the amount of funds for energy freezing assumed in the draft budget for 2025 against the total cost of this solution of approx. PLN 4.4 bn.