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2018/03/14 / Erste Group Research

Poland: Economy running at full potential

After expanding 4.6% in 2017, the Polish economy is expected to maintain robust growth this year as well. We revise our forecats slightly upward to 4.2% for 2018 and 3.3% for the following year. Domestic demand should be the pillar of the growth. The tight labor market supports solid growth of private consumption (which we see at 4.5% this year), while investment activity has began to recover and should accelerate further to 7.6%. Moreover, ongoing expansion in the Eurozone and the favorable external outlook is positive for the Polish economy.

Despite solid growth, well above the potential, inflationary pressure has been limited so far. Headline inflation remains below the central bank target for most of the time, while core inflation has been hovering around 1% for an extended amount of time. The accelerating growth of nominal wages has not translated into more visible demand pressure yet, which is one of the arguments for the MPC to hold the policy rate stable. The relatively dovish stance is here to stay for some time, limiting the pressure on the yield curve. The long end of the curve is likely to remian sensitive to global sentiment and follow the upward trend on core markets, while the zloty is expected to strengthen toward the end of the year.

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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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