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NBP Revises Forecasts: Higher Inflation and Lower Growth Expected for Poland

ECONOMYNBP Revises Forecasts: Higher Inflation and Lower Growth Expected for Poland

The NBP (National Bank of Poland) is changing its forecasts for Poland. In November, it projected inflation at 4.6%, but now, given that anti-inflationary measures will be maintained this year, we will find ourselves at the upper limit of the NBP’s target, around 3%. However, the Prime Minister’s announcements leave no room for illusion. VAT on food will return to 5%, which will probably cause a sudden increase in the price index by 0.9 percentage points. If the energy shield were to be also removed, inflation would still be significantly above the target – at 5.7%. While it should be expected that protective shields for businesses will expire from July 2024, regulation of energy prices for households will continue in force. Our inflation forecast is still closer to the upper limit of the projection. We predict that prices will rise by 5.9% throughout the year. The withdrawal from anti-inflationary shields, even partially, will strengthen the position of the Monetary Policy Council (RPP) – interest rates will not change.

NBP is also changing its economic development forecasts. 3.5% growth in 2024 is a highly optimistic result, largely based on the rebuilding of stocks – which means a once again unstable GDP foundation and relies heavily on consumer spending. The impact of the KPO (Cohesion Policy Operational Programme) measures in the NBP projection is only visible in 2025. We expect that part of these funds will still translate into this year’s result, which does not change the fact that economic growth in our scenario will be a maximum of 2.8%.

The NBP still shows that employers will be under strong wage pressure. Wages driven by an increase in the minimum wage, as well as increases in the public sector, will maintain a double-digit momentum throughout 2024.

Mariusz Zielonka, Confederation of Lewiatan.

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