Erste Group upgrades 2024 GDP growth forecast for Poland

Erste Group has raised its GDP growth forecast for Poland to 3.2% for 2024, up from the previous estimate of 2.8%. The revision reflects stronger-than-expected public consumption and investment growth. The forecast for 2025 remains at 3.7%, though with increased upside risks.

“Our revised forecast for 2024, now 3.2%, is primarily due to robust public consumption and investment growth,” said Erste Group analysts. Despite mixed retail and industrial sales data, consumption remains strong, with a shift towards services and a continued recovery in savings. Investment activity is expected to benefit from the Recovery and Resilience Facility (RRF), the Cohesion Fund, and expansionary fiscal policies.

For Q2 2024, GDP growth of 3.2% year-over-year was supported by higher-than-anticipated investment, which rose by 2.7% year-over-year, although inventories decreased by 1.1%. Net trade was a negative contributor due to weak external demand.

The analysts noted that while price growth remained stable in August, they expect a slight increase in inflation toward the end of the year. Consumer Price Index (CPI) inflation could approach 5% year-over-year in early 2025, driven by unfavorable base effects and rising service sector prices.

The National Bank of Poland (NBP) has flagged the risk of entrenched inflation expectations due to higher energy prices, though the analysts consider this a low-probability scenario.

Source: Erste Group and ISBnews