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2021/06/11 / Erste Group Research

Growth and inflation mix could trouble central bank

We expect the Polish economy to rebound strongly and expand by 4.8% in 2021 and 5.4% in 2022. Although economic activity in the retail and service sectors was restricted at the beginning of the year, the Polish economy expanded on a quarterly basis.

Rising consumer confidence and the solid situation on the labor market translated into positive growth of private consumption, while investment activity surprised and turned positive earlier than expected. Planned tax reforms could additionally boost household spending next year, while funds available within RRF will support investments.

Surging fuel costs and rising administered prices pushed inflation well above the central bank’s target in 1H21. We expect the headline figure to remain visibly above the upper bound of the target range in the coming quarters, while the re-opening of the economy and supply-side bottlenecks pose risks to the upside to our current FY21 forecast at 4.0%. Next year, inflation should lose some of its momentum, but will remain above the central bank’s target, as we see it at 3.5%. We think that the National Bank of Poland could deliver a 15bp hike after the November projection is out in order to anchor inflation expectations. Policy normalization is conditional on tapering of asset purchases program that could, in our view, end during summer.

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General information

AuthorErste Group Research
Product nameCEE Country Macro Outlook
Topic in focusFX, Macro/ Fixed income
Economy in focusPoland
Currency in focusPolish Zloty
Sector in focus-


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