Poland GDP Fitch lowers its forecast for the Polish economy

Fitch Ratings cut Poland’s GDP growth forecast in 2023 to 0.4 percent from 0.7 percent, and in 2024 to 2.5 percent from 2.8 percent – according to the agency’s latest report. Fitch expects further interest rate cuts by the Monetary Policy Board – to 5.50 percent at the end of this year and to 5.0 percent at the end of 2024.

“We expect the Polish economy to grow by 0.4% year-on-year this year, less than the 0.7% according to the June forecast. The recovery in private consumption, following a decline in inflation, should support a gradual recovery in activity in the euro area.” “End of 2023 and 2024. Lending to businesses slows down rapidly, which is caused by a decline in investment and working capital loans,” the report wrote.

The agency’s economists expect Poland’s CPI to fall to 8%. At the end of this year, 5.0 percent at the end of 2024 and 4.0 percent at the end of 2025.

Interest rates in Poland. The agency expects further cuts

According to Fitch, interest rates in Poland may fall by another 50 basis points by the end of the year. Up to 5.50 percent for the reference rate. Fitch expects cuts of 50 basis points throughout 2024 and 2025. Annually, up to 5.0 percent and 4.50 percent at the end of the period.

Doves and hawks in the Monetary Policy CommitteePAP works

“The National Bank of Poland indicated that it might cut interest rates when inflation fell to single-digit levels, but then surprised financial markets with a large cut of 75 basis points in early September, when inflation (the reading for August) was still higher.” From 10 basis points. The agency estimates that such a move indicates greater confidence at the central bank regarding the direction of the inflation path and greater concerns about growth prospects.

Due to the strong devaluation of the currency in response to the large interest rate cut in September, Fitch Ratings revised the forecast for USD/PLN at the end of 2023 to 4.50 from 4.30.

Main image source: Stock struggle

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