TOP MACRO THEME(S):
- Towards a less inflationary GDP structure: The preliminary full-year data implies that the GDP slowdown in 4q22 wasn’t as severe as we have expected, although consumer demand recession has been confirmed. GDP growth structure evolves towards a less inflationary one.
- Enterprise sector condition insights: Enterprises get more optimistic towards future and less pessimistic towards the severity of energy crisis.
WHAT ELSE CAUGHT OUR EYE:
- Manufacturing PMI in January increased to 47.6 pts (45.6 pts in Dec.), reaching the highest level since May 2022. The rapid rebound suggests that the biggest fears have passed and the current contraction episode (PMI< 50 pts) may be one of the shortest in the history of this indicator for Poland.
- CNB held the key interest rate at 7.0%. According to new forecasts, CPI inflation should slow down to 2% as early as 1h24 and recession should be milder. The ex ante real interest rate has thus become positive for the first time in years, similarly Poland will be heading in the same direction.
- F.B.Salazar (Fitch) assessed that due to external and internal challenges, the balance of risks to Poland's rating is tilted slightly downward. In a more difficult environment the stable outlook can be assessed as favourable.
THE WEEK AHEAD:
- Due to basket weight changes flash CPI for January will be released only in mid-February. The range of forecasts is unusually wide (16.1-20.5%). The reading will heavily depend on yet unknown decision of GUS on how to deal with electricity price hikes, which will impact only part of energy consumption. Should they be fully recognized in Jan., we would expect CPI at 18.7%. Should GUS recognize higher prices later in the year, in line with growing consumption, the January print will be lower, at around 18.0%.
- The MPC, deprived of the new inflation data, will leave monetary policy unchanged next week. Both the post-meeting statement and minutes from the meeting in Jan. will be a non-event. It’s the NBP’s Governor presser that will shed more light on the MPC view on a (conditional) monetary easing. This may happen in late-2023/early-2024, in line with current market expectations.
NUMBER OF THE WEEK:
- 4% – the share of GDP Poland wants to allocate on military in 2023 (increase from 3% of GDP in the budget bill).