Pekao lowers Poland's GDP forecast

Poland's economic growth in 2026 and 2027 is likely to be weaker than previously expected. This is according to a report published by Bank Pekao on 12 May. This is due to ongoing tensions in the Persian Gulf, which are weighing on private consumption and exports. Pekao now expects GDP growth of 3.5 percent in 2026 and 2.7 percent in 2027. The bank had previously expected 3.8 percent and 3.6 percent respectively. According to analysts, the downgrade primarily reflects the impact of higher energy prices on domestic demand and foreign trade. Energy prices weigh on inflation According to Pekao, a prolonged fuel crisis is increasingly becoming the baseline scenario. There is currently no clear prospect of a stable solution or a complete normalization of the situation around the Strait of Hormuz. Oil prices have settled well above the level before the escalation. The bank estimates that the strongest effect of the current fuel price shock on inflation is likely to become apparent around five to six months after it begins. Assuming that the shock began in March and continues in a similar form until the end of 2026, Pekao anticipates an oil price of around USD 100 per barrel and a natural gas price of EUR 50 per megawatt hour. In such a scenario, the energy crisis could increase inflation by around 2 percentage points. Pekao therefore sees growing risks of second-round effects. The bank now expects that annual inflation could rise to around 4 percent by the end of 2026. This would put it above the National Bank of Poland's tolerance band, which lies between 1.5 and 3.5 percent around the inflation target of 2.5 percent. Interest rate cuts are receding into the distance According to Pekao, the situation in the Persian Gulf has significantly reduced the willingness of the Monetary Policy Council to cut interest rates this year. The recent restrictive press conference by NBP Governor Adam Glapiński has even brought the possibility of interest rate hikes back into the discussion. The National Bank of Poland's reference interest rate has been at 3.75% since March. The labor market is also sending mixed signals. The unemployment rate remained at 6.1% in March. Wage growth accelerated year-on-year to 6.6%, while employment continued to fall by 0.9%. Pekao sees the falling demand for labor in particular as a warning signal. It indicates that the labor market is weaker than the continued low unemployment rate would suggest. The post Pekao lowers Poland's GDP forecast appeared first on ostwirtschaft.de.