Poland Macro Weekly: Toning down expectations regarding GDP growth

TOP MACRO THEME(S):

Way down they go (with the rates) (p. 2) – Monetary policy easing continues in the region, although monetary authorities have become increasingly concerned about the persistence of inflation and may slow down the pace of interest rate cuts. Poland is drifting away on its hawkish boat.

WHAT ELSE CAUGHT OUR EYE:

CPI inflation for June was confirmed at 2.6% y/y. Core inflation fell more than expected to 3.6% y/y, while its annualized momentum translates into inflation slightly below the upper end of the NBP target range.
CAB surprised on a negative note with a deficit of EUR 63m vs widely expected surplus. However, 12-m rolling CAB remained at +1.8% of GDP.
Industrial production in June came in stronger than expected. In our view the good result is not a one-off but the beginning of a more positive trend. However, weak external demand combined with PLN strength remain a barrier for Poland’s export sector. Nonetheless, the robust recovery in domestic demand should support continued revival in manufacturing.
Nominal wage growth in the enterprise sector slowed down to 11.0% y/y in June. Wage pressure seems to be easing, consistent with business survey results. The momentum of wages (3m average % m/m sa changes) has weakened in recent months, but remains double-digit when annualized.
The NBP's Quick Monitoring Survey indicates that condition of the enterprise sector continued to deteriorate in 2q24 and forecasts for 3q24 are pessimistic, with less favorable expectations regarding demand growth, especially in the domestic market. Meanwhile, consumer sentiment deteriorated in July, both with regard to current and expected situation.
Finance minister, Domanski, denied reports of a higher than previously anticipated increase in excise duty on alcohol in 2025.

THE WEEK AHEAD:

Retail sales and construction data for June will indicate the necessary scale of downward revision of our GDP growth estimate for 2q24 (more details on other macro publications in the calendar).

NUMBER OF THE WEEK: