Zloty Advances Despite Disappointing 2023 GDP Outturn

EUR/PLN sold off into the European morning, showing little reaction to a weaker-than-expected 2023 GDP reading, which was almost in line with the NBP forecast and accompanied by an upside revision to the 2022 reading. The pair last deals -78 pips at 4.3437, probing the water under Jan 22 low of 4.3447. This paves the way for a move towards Dec 13 low of 4.2935. Conversely, a rebound above Jan 17 high of 4.4124 could reassure bullish players.

• Poland's economy expanded 0.2% Y/Y in 2023, missing the +0.5% consensus call (forecast range was +0.1%-0.7% Y/Y). The NBP's projection from its November macroeconomic forecast was +0.3% Y/Y. On the other hand, the reading for 2022 was revised higher to +5.3% from +5.1%. Local sell-side desks described the outcome as disappointing and noted that dampened household consumption weighed on overall GDP growth, adding that a recovery is expected in the coming quarters.
• On the political front, PM Tusk pulled out of talks with the New Left on his own proposal to jointly contest the upcoming local elections, reportedly on the assessment that it could empower his coalition partners. He also floated the idea of calling a snap election should President Duda try to block the budget, but the odds of this scenario coming to fruition are rather low.
• POLGB curve has been subject to a notable bull flattening impetus, with yields last seen 7.1bp-9.0bp lower. The WIG20 Index continues to creep higher, adding 0.4% this morning.