It is indeed favorable that the budget has been approved. However, some figures within it have caused sincere astonishment among analysts. The major point of concern is the deficit, which, in terms of value, breaks all previous records and is the highest in relation to the GDP in the last 22 years.
We have a budget for 2024
Yesterday, the parliament approved the budget for 2024. On one hand, this is incredibly good news for stability, as non-adoption of the budget necessitates early elections. On the other hand, the budget shows a deficit of 184 billion zlotys. Yes, that’s right, we really do have a budget deficit of 184 billion zlotys. Of course, the Polish economy is growing, so it is not entirely appropriate to compare it with a few years ago when it was far less. However, it’s worth checking the deficit as a percentage of GDP. Interestingly, history is repeating itself. In 2024, we will have the same 5.1% as in 2002. Therefore, it seems we are returning to the so-called “Bauc hole” phenomenon reflecting a sudden increase in the deficit. To better understand the scale of the problem, remember that the entry criteria for the Eurozone is a maximum of 3% deficit. Whether these are complied with is another story.
What about raw materials?
The price of crude oil has been quite stable this year. For most of the time since the beginning of the year, it has moved within a fairly narrow band in the range of about 76 to 79 dollars per barrel. Neither the events around the Suez Canal, where air strikes were carried out on certain positions of fighters in Yemen, nor the recent events between Iran and Pakistan affected this. Gas, however, is a much more interesting case. It began the year with almost 15% increase within the first few days. Currently, not only has it lost those gains, but it has lost twice that. The drop in the price of a megawatt-hour is not something we should worry about. After all, it translates to cheaper heating for our homes. Despite the snow, which has lasted quite long this year, the winter continues to be mild, thereby posing no threat to the levels of storage filling.
Prices in the UK are not slowing down
The data released yesterday on the rate of price increase certainly did not impress the Brits. Inflation was forecasted to drop below 5% for the first time since January 2022. As can be inferred, it did not drop and remained at 5.1%. On the other hand, we have producer inflation, which is slowing down. Analysts expected a rise of 0.4% compared to last year, but the actual increase was a mere 0.1%. Hence, we are almost back to the situation of the previous month, where producer prices truly fell, and did not just rise more slowly.
Today, in the macroeconomic data calendar, it is worth paying attention to:
14:30 – Canada – Retail sales,
14:30 – USA – University of Michigan Report,
16:00 – USA – Existing Home Sales.
Maciej Przygórzewski – Chief Analyst at InternetowyKantor.pl
