MACROscope

Once again this year, we are revising our forecasts for the Polish economy towards higher inflation and slightly weaker economic growth. This reflects, firstly, the flow of new economic data, which surprised on the downside in terms of GDP growth in 1Q this year and on the upside in terms of the scale of price increases in April, including in core categories; and secondly, the prolonged blockage of the Strait of Hormuz, which is pushing up the expected trajectory of energy commodity prices in the coming months. We continue to assume that de-escalation of the conflict over the coming weeks remains the baseline scenario. (...)

In mid‑March we published a report outlining three scenarios for the development of the economic outlook, depending on how prolonged and severe the commodity shock triggered by the war in Iran would prove to be. Three weeks later, we can conclude that the first scenario, which we had then considered the most likely, turned out to be overly optimistic, and the baseline scenario is shifting towards scenario number two: the conflict does not escalate further, but prolonged uncertainty and the damage already inflicted on infrastructure mean that commodity prices may remain at least 15–20% above their February levels for most of this year. Recent reports about an agreement on a two‑week ceasefire are interpreted by us as a clear signal that neither the US nor Iran is interested in further escalation or a prolongation of the war. (…)