Poland will stay with high inflation shown in the prices of consumer goods and services until at least 2024, but the Polish economy should not be affected by the recession.
However, the Monetary Policy Council will continue to raise interest rates – these are the conclusions of the latest edition of the Market Barometer, an economic climate indicator developed by CFA Society Poland in cooperation with Business Insider Polska.
Business Insider Polska and CFA Society Poland conducted a survey among association members, financial market experts. The survey was conducted in April on a sample of 101 professionals. On this basis, the Market Barometer is created, which is an element of our BIndicators project, i.e. cyclical forecasts for the Polish economy.
No recession in Poland
In recent weeks , analysts are beginning to wonder whether the economic slowdown in Poland will turn into a recession . The arguments for such a scenario are the Russian aggression against Ukraine and its economic consequences that are spreading around the world. In addition, the economy is strongly cooled by interest rate increases.
Almost three-quarters of the financial market professionals surveyed do not expect our economy to enter a recession in the next several months. Although they expect that the Monetary Policy Council will continue to raise interest rates. Experts expect GDP to grow by 2–4% this year.
With inflation for longer in Poland
Two-thirds of respondents claim that the main NBP interest rate will reach at least 5%. This is likely to happen at tomorrow’s MPC meeting, because today the central bank’s reference rate is at 4.5%.
“The opinions of the members of CFA Society Poland are important because they predicted the beginning of the current cycle in October last year well, contrary to the market expectations at that time” points out Przemysław Barankiewicz, vice president of CFA Society Poland.
Interestingly, the professionals associated in CFA Society Poland, who observe the situation on the financial markets and the economy on a daily basis, are less “hawkish” than what the market evaluates. Current market quotes indicate that the reference rate will reach about 7%, with less than one in ten respondents agreeing to it.
There is not much optimism in the issue of inflation returning to the NBP target. Only every eighth respondent expects inflation to be in the range of 2.5%. plus or minus 1 percentage point earlier than 2024.
This means that we will have to live with high inflation for almost two more years. This is related to the expectation that the MPC will start lowering interest rates only in the second half of next year. One third of those polled believe it will be then, and about half that it will be in 2024 or later.
High inflation, solid GDP growth and the continuation of the monetary policy tightening cycle will translate, according to the CFA Society members, into a stabilisation of the zloty exchange rate . Most of the surveyed professionals believe that we will pay about the same for the euro at the end of this year as we do today.
“Of course, financial markets can play tricks, but the situation in which interest rates are rising, and at the same time the economy driven by the fiscal impulse does not slow down, has historically favoured the strengthening of the currencies of emerging countries, which still include Poland ” believes Bartosz Pawłowski, vice president of CFA Society Poland.
In connection with the situation on the currency market, we also asked whether Poland should start making efforts to join the euro area. Here the answer is unequivocal – two-thirds of members believe no, even despite the geopolitical risks associated with Russia’s invasion of Ukraine .
Real estate puzzle in Poland
The rapid increase in the cost of money by the MPC makes the future of the Polish real estate market one of the hottest topics in the economy. Therefore, the most divisions in the survey among people with the CFA title were prompted by the question about the change in real estate prices in the rest of the year.
Here the voices were distributed almost evenly, although the view that they would increase nevertheless gained a slight advantage. It seems that the key factor here will be the development of the situation related to government aid for borrowers, which we will see, however, in a few months.