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Fitch See Poland's 2023 GDP Growth At +0.4% Y/Y, Expect Another 50bp Of Rate Cuts This Year

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Fitch lowered their 2023 GDP outlook for Poland to +0.4% Y/Y from +0.7% previously, with 2024 growth forecast revised to +2.5% from +2.8%, PAP news wire reports. The ratings agency expects the NBP to cut interest rates by 50bp until end-2023, which will be followed by further 50bp reductions both in 2024 and 2025.

  • Fitch expect headline CPI inflation to be at +8.0% Y/Y at the end of this year, slowing further to +5.0% at the end of 2024 and to +4.0% at the end of 2025. This implies that the +2.5% Y/Y +/- 1pp inflation target will not be reached over that period, while the NBP's +6%-7% Y/Y inflation forecast for end-2023 will not materialise.
  • "The NBP signalled that it could lower interest rates when inflation falls to single-digit levels, but then surprised financial markets with a large 75bp cut at the beginning of September, when inflation (August reading) was still above +10% Y/Y. Such a move suggests that the central bank has greater confidence about the inflation path and stronger concerns about the growth prospects."
  • Fitch revised their EUR/PLN forecast for end-2023 to 4.5 from 4.3, following the recent depreciation of the zloty. The rate currently trades in the 4.6 area.
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Fitch lowered their 2023 GDP outlook for Poland to +0.4% Y/Y from +0.7% previously, with 2024 growth forecast revised to +2.5% from +2.8%, PAP news wire reports. The ratings agency expects the NBP to cut interest rates by 50bp until end-2023, which will be followed by further 50bp reductions both in 2024 and 2025.

  • Fitch expect headline CPI inflation to be at +8.0% Y/Y at the end of this year, slowing further to +5.0% at the end of 2024 and to +4.0% at the end of 2025. This implies that the +2.5% Y/Y +/- 1pp inflation target will not be reached over that period, while the NBP's +6%-7% Y/Y inflation forecast for end-2023 will not materialise.
  • "The NBP signalled that it could lower interest rates when inflation falls to single-digit levels, but then surprised financial markets with a large 75bp cut at the beginning of September, when inflation (August reading) was still above +10% Y/Y. Such a move suggests that the central bank has greater confidence about the inflation path and stronger concerns about the growth prospects."
  • Fitch revised their EUR/PLN forecast for end-2023 to 4.5 from 4.3, following the recent depreciation of the zloty. The rate currently trades in the 4.6 area.