The most important economic events: GDP, PMI, budget, and the Monetary Policy Council decision

5ced6c0b082a81d692c4ba16fa9fcda5, Biznes Fakty

Inflation data in Poland TVN24

At the start of the week, preliminary figures on Gross Domestic Product for the second quarter and the most recent PMI index for Polish manufacturing will be released. Investors will also scrutinize the specifics of the proposed budget act for 2026. In the upcoming days, the focus will shift to the decision made by the Monetary Policy Council and the conference led by the President of the National Bank of Poland. The week will wrap up with Fitch’s assessment of Poland’s rating, anticipated for Friday.

On Monday, the Central Statistical Office will unveil an initial estimate of GDP for the second quarter of 2025. The flash estimate indicates a year-on-year GDP growth of 3.4% during this period, compared to a growth of 3.2% in the first quarter of 2025. This reading aligns with analysts’ forecasts.

„We anticipate that the reported GDP growth of 3.4% was attributed to a modestly faster rise in domestic demand compared to Q1 (from 4.6% to 4.9% year-on-year), particularly in public consumption, alongside a slight deceleration in investments (from 6.3% to 4.0% year-on-year),” state economists from Santander BP.

Key economic data

As per the consensus compiled by PAP Biznes, the market predicts that private consumption in Poland will increase by 3.6% year-on-year in Q2, investments by 4.5% year-on-year, and domestic demand by 4.7% year-on-year.

On Monday, investors will also receive the Polish manufacturing PMI for August. The PMI for July rose to 45.9 points from 44.8 points in June. The study’s authors noted at that time that the July figures indicated that the worst of the economic downturn might have passed, as reductions in production, new orders, and employment had eased, with an improved outlook for the next 12 months.

The budget draft under examination

In the coming days, domestic investors will be scrutinizing the draft budget act for 2026, which was published on Friday afternoon. The draft proposes a budget deficit limit of PLN 271.7 billion.

According to forecasts from the Ministry of Finance, the general government debt-to-GDP ratio (as defined by the EU) is projected to reach 60.4% by the end of 2025 and 66.8% by the end of 2026. Meanwhile, the nationally defined public debt (PDP) is expected to rise to 53.8% of GDP in 2026 from 48.9% in 2025. The project assumes that the general government deficit in 2026 will amount to 6.5% of GDP, in comparison to the 6.9% of GDP planned for 2025.

The macroeconomic outlook suggests that Poland’s GDP will grow by 3.5% in 2026, with an average annual inflation rate of 3.0%.

In their comments, economists pointed out that while the adopted macroeconomic scenario appears realistic, the levels of debt and deficit could raise concerns.

„Currently, the budget situation does not raise alarms regarding the stability of public finances, but the rapid accumulation of public debt indicates that maintaining creditworthiness among investors necessitates the presentation of a credible fiscal consolidation plan and convincing stakeholders of the political will to implement it,” say economists from ING BŚ.

The draft budget law is crucial for the future actions of the Monetary Policy Council – the Council’s first decision-making meeting following the summer break is set for Tuesday and Wednesday. In recent months, National Bank of Poland President Adam Glapiński has noted that one of the risks to monetary policy is the government’s lax fiscal policy.

Citi economists estimate that, although the draft budget for 2026 is unlikely to significantly alter the inflation trajectory in the near term and there remains room for monetary policy easing, the Monetary Policy Council may adopt a more cautious stance.

However, a stronger-than-anticipated drop in inflation in August supports potential cuts. According to preliminary estimates from the Central Statistical Office (GUS), the CPI was 2.8% year-on-year and -0.1% month-on-month last month, against market expectations of 2.9% year-on-year and 0.0% month-on-month. Economists from Santander BP emphasize that a decision to lower interest rates in the upcoming meeting is not guaranteed, however.

„The decision is no longer as clear-cut as it appeared prior to the budget announcements. On one hand, the decline in inflation (to 2.8% year-on-year in August) should encourage the Council to continue lowering interest rates; on the other hand, the substantial deficit and the government’s lax fiscal policy, coupled with the deadlock between the government and the president (blockage of tax increases), may prompt a delay in the decision regarding further rate reductions. For now, we maintain our position that a decision on a 25 basis point cut will be made, but with a considerable risk of no changes,” wrote economists from Santander BP in a report.