Poland Macro Weekly: Two opposing forces

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TOP MACRO THEME(S):

• Fire and water (p. 2) – we summarize our mid-term quarterly report in which we slightly revised down GDP growth and inflation forecasts for 2024. Polish economy will be subject to two apparently opposing forces this year: economic recovery and disinflation.

WHAT ELSE CAUGHT OUR EYE:

• The MPC left interest rates unchanged and does not signal any intentions to resume rate cuts anytime soon (see p.2).
• In line with previous announcements a group of deputies submitted a motion to the Sejm to put the NBP Governor before the State Tribunal with regard to allegations of violations of the Constitution and the NBP Act. During a press conference, NBP Management Board representatives stated that the motion was an attempt to violate the independence of the bank.
• CPI inflation in March fell to 1.9% y/y from 2.8% y/y. Inflation is currently at its lowest level since March 2019. The decline in inflation in March was mainly due to the prices of food and non-alcoholic beverages, which decreased by 0.2% during the month, clearly below the seasonal pattern and increases observed in previous years. In March, CPI inflation reached a local minimum. From April it will start to gradually go up, but should remain within the allowed volatility band around the NBP target in 1h24 (more on p.2).
• Manufacturing PMI in March inched up to 48pts from 9pts in February. The index has remained below the neutral threshold of 50pts for 23 months, which means that the current episode of economic downturn is equal to the previous longest one, recorded between September 2000 and July 2002.
• Financial results of non-financial companies deteriorated in 4q23 – in annual terms revenues and costs fell by 1.3% and 0.2% respectively, which translated into net financial result falling by 26.3% y/y. Disinflation (deflation in manufacturing) is not good news for the corporate sector.

THE WEEK AHEAD:

• Local macro data will only include current account balance for February, where we expect a slight deterioration. Minutes of the MPC meeting in March will have mainly a reporting value.

NUMBER OF THE WEEK:

• 36 – CPI inflation in March was below the NBP target for the first time in 36 months.  

Drukuj