Country Economic Forecasts > Poland

Despite continued policy uncertainty and a deepening constitutional crisis, Polish assets have stabilised in the wake of the January credit rating downgrade, with the zloty recovering most of its January losses. We expect growth momentum to remain strong and GDP to expand by 3.7% in 2016 and 3.5% in 2017, with the drag from lower EU-funded investment more than compensated for by strong consumer spending, itself boosted by the PLN500 in monthly child benefit to be paid from July. Meanwhile, despite a sharp revision to its 2016 inflation forecast from 1.1% to -0.4% y/y and a stabilising zloty, the new MPC has maintained its hawkish stance, reducing the chances of a resumption in policy easing this year. We still believe that the central bank will need to ease rates by 25-30bp in 2016, but the risks are rising that monetary policy will remain tight.