Scale of Poland's GDP rebound this year uncertain due to economic situation in Germany

The April meeting of the Monetary Policy Council (RPP) assessed that the dynamics of economic activity in the following quarters is likely to grow, according to the ‘minutes’ of the meeting. The scale of the economic recovery is subject to uncertainty, among others, by the further development of the economic situation in Poland's main trading partners.

‘Discussing the outlook for the economic situation, the Council members assessed that the dynamics of economic activity is likely to grow in the following quarters. The Council members indicated that this will be fostered in particular by favourable conditions for domestic demand in the face of increased wage dynamics, including in the context of an increase in the minimum wage and increases in the public sector. At the same time, the scale of the economic recovery is subject to uncertainty, and one of the risk factors for the prospects of economic activity is the further development of the economic situation in Poland's main trading partners,’ reads the ‘minutes’ of the meeting.

It pointed out that in the Eurozone - Poland's main trading partner - economic activity remains subdued and GDP growth in Q1 2024 was likely to have been only slightly positive.

‘In Germany, economic activity may have declined again in Q1, with particularly weak activity in the industrial sector there. It was highlighted that growth forecasts for Germany have been revised downwards in recent times and now signal a clearer recovery in the German economy only in 2025,’ the material assessed.

The MPC members assessed that the incoming data point to a recovery in the Polish economy.

‘Referring to the situation on the labour market, it was pointed out that nominal wage growth in the corporate sector remained high in February this year. Council members stressed that, amid a further decline in inflation, in February this year real wage growth in the business sector was at its highest level in many years,’ they stressed.

Referring to the labour market, the Council indicated that there had been another slight decline in employment in the business sector.

‘During the discussion, it was pointed out that the dynamics of zloty-denominated loans to households was growing. According to the Council members, the so-called ‘Safe Credit’ programme continued to contribute to this. At the same time, it was stressed that the annual dynamics of loans to enterprises remained negative, mainly due to the decline in current loans,’ the central bank wrote.

Source: RPP and ISBnews