Economic Analysis

In today's Eyeopener:

• Today, US home sales data for April
• Global food price growth increased to 2.0% y/y in April
• The registered unemployment rate in Poland declined to 6.0% in April
• The EURPLN exchange rate slightly higher, bond yields stable

In the coming week we will see how much Poland’s economy expanded in 1Q, the details behind April higher-than-expected inflation, and we will review trade data for March – the first month of the conflict in the Middle East. We are also looking for comments from MPC members that could help gauge their readiness to raise interest rates, following the signal of a more hawkish stance from the NBP governor.

Today’s press conference of NBP governor Adam Glapiński had a similar structure to the previous one. Glapiński stressed that the energy commodity price shock is much smaller than in 2022/2023, but this is no reason to ignore the current shock. The Council is monitoring the geopolitical developments and waiting for further government decisions regarding fuel taxes (formally, the mitigating measures expire on 15 May, but in our view are highly likely to be extended, possibly covering the rest of the year).

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. (…)