Weekly Focus Poland
We revised our FY19 growth forecast and expect economy to slow to below 4.0% next year, with domestic demand remaining pillar of growth. Limited inflationary pressure should support stability of rates scenario also next year. Final inflation figure for August will most likely confirm flash estimate at 2.0%, which we also see as this year’s peak. This week, ECB meeting should not bring any change of stance; hence, data should be neutral for FX and bond market. Zloty remains under pressure of global sentiment and EURUSD.
September 10: We revised our FY19 growth forecast. Economic growth most likely peaked in 1H18, with growth dynamics above 5%. Leading indicators suggest cooling off of the economy in the coming quarters. Despite that, 2H18 should still sustain the solid growth dynamics and expand by around 4.5%, whereas next year we expect the growth below 4.0%. Domestic demand; in particular, private consumption should remain the pillar of growth.
September 13: Flash CPI to be confirmed at 2.0%. We expect the flash estimate of inflation to be confirmed at 2.0% y/y (0.0% m/m) in August. In the coming months, we expect inflation to ease and hover within the lower bound of the inflation target and move toward 1.2% y/y at the end of the year.
September 14: we expect the credit rating to be confirmed by Moody’s. We expect that Moody’s will confirm the Polish credit rating at A2 with stable outlook.
Zloty held above 4.30 vs. EUR. The zloty weakened against the euro over the last week, due to the
stronger US dollar, supported by favorable macro data in the US and
deteriorating global sentiment. The decision and press conference of the
MPC was mostly neutral for the EURPLN, as the decision about rate
stability was widely expected. This week, the ECB council meeting takes
place; we do not expect any change in the monetary policy stance;
hence, the decision should be neutral for the bond and FX market.