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Macroeconomic scenario

Economic growth

The prolonged conflict in the Persian Gulf along with the associated disruptions in energy supply and maritime transport prompts us to cut economic growth forecasts yet again, mainly due to the expected weakness in household consumption and exports. We expect Polish GDP to grow by 3.5% in 2026 and by 2.7% in 2026 (previously: 3.8 and 3.6%).

Inflation

The scenario of a prolonged fuel crisis is slowly becoming the baseline. There are currently no prospects for a stable agreement resulting in the Strait of Hormuz opening, and market oil prices have stabilized significantly above pre-escalation levels.

According to our analyses, the peak impact of the current fuel shock on Poland’s inflation will occur approximately in 5-6 months. Assuming March as the beginning of the current shock and its current structure and scale (Brent crude oil market price around 100 USD/barrel, natural gas price 50 EUR/MWh) persist until the end of 2026, the oil crisis could increase inflation by about 2 percentage points. The second-round effects should now be seriously considered. In this scenario, we see a need to revise our inflation path upwards – over the course of the year, CPI will rise to reach about 4% yoy by the end of 2026, thus exceeding the permissible deviation band of the NBP inflation target.

Labour market

In March, there were significant developments in the domestic labour market. The unemployment rate remained at 6.1% due to regulatory factors, contrary to the usual seasonal pattern, wage growth accelerated to 6.6% yoy, and employment deepened its decline to -0.9%. In our view, the latter indicator is the most telling in assessing the current condition of the labour market. Labour demand is weakening, while spikes in wage growth are purely incidental, as its trajectory is and will remain downward. The registered unemployment rate once again provides limited insight into the actual state of the labour market.

Monetary policy

The Gulf War – even if put on hold by the ceasefire – quenched any appetite in the Polish MPC for rate cuts this year. Moreover, with his latest hawkish press conference, governor Glapiński gave his blessing to current market pricing and put rate hikes on the table. This is not a baseline scenario for the MPC and market consensus is far from it at the moment. Nevertheless, the MPC turned hawkish and the balance of risks is tilted towards hikes, not cuts. We expect rates to be unchanged until the end of 2027.

Financial markets

The Gulf War – a nuisance, rather than a crisis

We still talk about the Gulf War in the past tense, but over the past month, oil prices have risen rather than fallen. Why? Because the Strait of Hormuz remains closed, and the peace talks between Iran and the U.S. have yielded nothing. The gap between the parties’ positions is as wide as ever, and it seems that the status quo is acceptable in the short term, even if it is far from ideal. So the markets are bracing for prolonged supply disruptions… but not all markets. Major stock indices are much higher than before the outbreak of the war, not to mention the ceasefire in the Gulf War.

Where does this optimism come from? A month ago, we wrote that what matters for asset valuations is not so much the level of oil prices or GDP, but rather GDP growth and a return to growth. If the doomsday scenarios do not materialize, then from a macroeconomic perspective, the current episode will be remembered as a “soft patch” rather than a recession with unpredictable and non-linear course and consequences. Nothing changed on that front.

This also means that risky assets should return to their previous trajectory relatively quickly. Risky assets also have other themes to play out, such as AI or the state of fiscal policy in developed countries (the latter applies to bonds). We cannot expect equity investors to focus indefinitely on the Strait of Hormuz if its significance is less than it might have seemed just a few months ago. The economic costs of its closure are real, but not decisive.

Weak dollar and its consequences

The rise in risk appetite also has other consequences. The war was not a turning point for currency markets or for the bets popular in 2025 regarding the dollar’s role and the dominance of U.S. assets over the rest of the world (i.e., it did not mark a turning point). It appears more like a pause or a lull. This is clearly visible in EM currency quotes. Despite greater exposure to the oil shock, EM currencies, at the time of writing this commentary, are just a small step away from strengthening above the levels last seen before the outbreak of the war in the Persian Gulf. Alternatively, the dollar is currently at its weakest since late February. The zloty remains further from its early-year highs, but this is mainly due to idiosyncratic factors—the EM basket did not strengthen in late January as much as the zloty did, so the bar is set lower.

We interpret market behavior and conversations with investors as consistent—Polish assets remain in demand, and Poland is in vogue. The zloty should gain ground in the medium term, especially since the path of future interest rates has shifted upward.

Selected macro releases due this month

• Industrial production (our forecast April: 4.2% yoy) We expect industrial output to slow down after a very good March (+7.3% yoy). This is mainly due to a reversal in some one-off factors observed in the previous month and an unfavorable difference in working days (0 rather than +1 yoy).
• Retail sales (our forecast April: 3.0% yoy) March was a stellar month for retails sales, but would have been even better if a larger past of pre-Easter sales of food materialized in March. This has a flip side – the variability of retail sales around Easter will be smaller than anticipated this year. The slowdown in April is inevitable (due to high base and trading day arrangement, among others), but not catastrophic.
• CPI inflation rate (our forecast April: 3.2% yoy) The April flash CPI reading surprised negatively, showing an increase to 3.2% yoy from 3.0% in March. There are several reasons for the surprise: a shallower-than-expected decline in fuel prices (only -1.8% mom), a sharp increase in energy prices (+0.5% mom), and, most worryingly, acceleration of core inflation to 2.9% yoy. The data suggest mounting price pressures across a broader consumer basket in response to the current fuel crisis.
• Wages in the enterprise sector (our forecast April: 5.6% yoy) In April, all factors pointed to a deceleration in wage growth. First, a high base effect from the previous year, driven by one-off bonus payments in the forestry and mining sectors. Second, the lower number of working days (-1 yoy), and one fewer shopping Sunday than a year earlier, which usually affects wage growth in the retail sector. Third, the elevated base effect from the previous month (approximately 0.2 pp). Taken together, these factors point to a reading clearly below 6% yoy.
• Unemployment rate (our forecast April: 6.0%) Cuts to the funding of activation programs for the unemployed will continue to distort the unemployment rate readings. In April, this effect most likely once again inflated the number of registered unemployed, although not as sharply as in March. As a result, we expect to see a decline in the unemployment rate broadly in line with seasonal patterns, from 6.1% to 6.0%, which is in line with flash reading published by the Ministry of Labour.
• Current account balance (our forecast March: EUR -1250 mn) The trade balance has passed its cyclical low and is gradually emerging from the deficit. Unfortunately, the Middle East conflict and resulting significant surge in imported fuel prices will push the trade balance back towards a deeper deficit (lower terms-of-trade).
• NBP interest rate (our forecast June: 3.75%) The MPC will wait and see. Rates are unlikely to change this year.