CA economists cut the GDP growth forecast for Poland. What about inflation and rates?

Credit Agricole economists lowered their forecast of Poland's GDP growth for 2026 to 3.3 percent, from 3.6 percent. forecasted in advance; for 2027 they remained unchanged at 3.0 percent. – according to the bank's report on Monday. According to the latest forecasts, average annual inflation in Poland will amount to 3.9%. y/y in 2026 and 3.6 percent in 2027

“The escalation of the conflict (in the Middle East – PAP) requires a correction of the scenario: higher energy and transport prices, slower growth of real incomes, greater investment caution of companies and an increase in global risk aversion will contribute to slightly slower growth in the coming quarters,” the report wrote.

At the same time, the scale of the revision remains limited because we assume that households will smooth the consumption path and the acceleration of public investments co-financed from EU funds will cushion the negative impact of the shock. As a result, we lower the forecast of GDP growth in Poland in 2026 to 3.3%, while leaving the forecast for 2027 unchanged at 3.0%. – added.

Before the escalation of the conflict in the Middle East, economists assumed that CPI inflation in Poland would remain relatively close to the NBP target in 2026–2027. They have now revised this path significantly upwards and expect average annual inflation to amount to 3.9%. y/y in 2026 and 3.6 percent in 2027

So far, we have assumed that the Monetary Policy Council will continue the cycle of easing monetary policy in the second quarter of this year. However, the escalation of the conflict in the Middle East and the resulting shift in the inflation path significantly upwards mean, however, that the space for further rate cuts in the coming quarters has significantly decreased. Such an assessment is consistent with the statements of some MPC members, the report wrote.

“In our opinion, the Council will remain cautious as long as inflation remains above the upper limit of permissible deviations of inflation from the NBP target. As a result, we are postponing the next interest rate cut by 25 bp to Q2 2027. At the same time, we are not changing the target level of interest rates, which in our opinion is still 3.50%. We only assume that it will be achieved later than we expected before the shock materialized,” it was added. (PAP Biznes)

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