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Research Detail

2017/12/13 / Erste Group Research

PL Macro Outlook

The Polish economy is expected to expand 4.4% this year. Next year, the overall growth dynamics should remain robust, but we see them somewhat lower at 3.7% y/y, while the risks remain to the upside. Private consumption will remain the key driver of the growth, but as the positive effects of 500+ have began to fade out, the expected growth dynamics will likely be lower. We believe that investment dynamics should eventually rebound, as the absorption of EU funds has been increasing, but the sluggish private investments are likely to weigh on the growth dynamics. Investment growth is the factor that leaves the room for the surprise to the upside though. Double-digit growth of investment could easily push the FY2018 GDP above 4%.

The average inflation in 2018 should remain below the target of 2.5% (our forecast is at 2.2%). While the headline CPI should ease at the beginning of the year, it is expected to increase above the target rate in mid-2018 and drop toward 2% at the end of the year. At this point, we see a possibility of a rate hike in 4Q18, however only if the inflationary expectations significantly increase and the threat of overshooting the target is substantial. We expect the spread vs. Bunds to remain stable around 300bp with moderate growth of the nominal yield driven by the increase on core markets, with the zloty to remain in a sideways trend.

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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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