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In short: both inflationAs well as economic growth, which is expected to accelerate in the second half of this year until reaching its peak in the first quarter of 2025 (average year-on-year at 6.3% in terms of inflation – for the entire quarter, and at 4.3% per year in terms of GDP).
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Then, over the rest of 2025, the economy is expected to gradually catch its breath (as this year’s boost starts to partially fade), while inflation is expected to fall back towards the official NBP target again.
NBP forecast for Poland. What awaits investors in 2025?
The central bank’s forecasts have performed well again for about two years (the worst in this regard was during the rapid inflation surge in 2021-22). Therefore, we assume that they will be pretty accurate today. With that assumption in mind, what do the latest forecasts mean for investors?
Let’s start with the simplest thing. The rebound in inflation expectations is the MPC’s reason for keeping inflation unchanged. Current level of interest rates (The reference rate is 5.75%). After the last Council meeting, NBP Chairman A. Glapiński made a hawkish statement, saying that there will be no reduction in carbon emissions before 2026, but it still surprised people.
Maintaining high interest rates has a simple consequence – it means high WIBOR, which in turn translates into high interest rates on government and corporate bonds, and even further into good returns on debt funds. Therefore, the asset class remains the most obvious candidate for portfolio inclusion in the coming quarters.
How about (Poland) stocks? Traditionally, the acceleration of GDP growth in recent quarters (which is expected to continue) has greatly helped the company’s stock prices. At one point in the fall of 2022, WIG was up more than 90% from the bottom. The problem is that if GDP growth gradually slows down next year, this could have a negative impact on the stock market, as it has historically been the case. Worse, the stock market typically leads the economy, so the prospect of a slowdown next year should be discounted in advance. Unless the NBP’s forecasts of the dates of GDP growth peak and subsequent slowdown are completely wrong.
The author is Tomasz Hońdo, Senior Economist at Quercus TFI SA
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