Economic news

• PRICES: Inflation in May stood at 3.1% yoy – confirmed Statistics Poland in the second reading. Most items in the consumption basket declined in mom terms, including food and beverages (falling prices of new fruits and vegetables), clothing, transport, sport and recreation services, etc. Headline CPI also fell by 0.3% mom. This suggests that the inflationary shock from energy costs has already started to dissipate. The CPI index is likely to remain elevated over the next few months but should decline towards NBP target level of 2.5% in early 2027.
• RATES: Last week brought a couple of dovish remarks from the MPC. On Thuesday G. spoke to Bloomberg, saying that under current conditions the probability of interest rate cuts is higher than that of hikes. In her view, although the positive surprise in the May inflation data is still not enough to begin discussing monetary easing, a stabilisation of inflation within the permissible deviation band around the target would make it possible to resume cuts. Masłowska stressed, however, that a sine qua non condition for CPI stabilisation would be the government’s continuation of the CPN programme. On Wednesday, I. Dąbrowski stated that, given stable inflation prospects, monetary tightening is not currently being considered. Dąbrowski judged that inflation should remain within the range of acceptable deviations from the target, which means that interest rate hikes will not be needed – and if geopolitical risk declines, there could even be room for rate cuts.
• PUBLIC DEBT: Public debt (PDP definition) subject to the constitutional ceiling of 60% of GDP) rose to 50.6% of GDP after Q1 2026 - according to Ministry of Finance. Meanwhile, general government debt (EDP, calculated according to the European methodology) reached 61.6% of GDP, up by 1.9 percentage points since the end of 2025. The Ministry indicated that the consolidation of BGK funds in the first quarter reduced EDP debt relative to PDP by PLN 12.2bn; meanwhile, the increase in debt of the Armed Forces Support Fund added PLN 6.3bn. The share of EDP debt denominated in foreign currencies also declined (to 25.9%), primarily due to a 0.5pp reduction in the euro share. We maintain our forecast that public debt (EDP definition) will reach around 67% of GDP by the end of 2026.
• LABOUR MARKET: According to the preliminary estimate of MRPiPS, the registered unemployment rate fell by 0.1pp in May to 5.9%. This figure is in line with our forecast. In its statement, MRPiPS indicated that 80.3k new unemployed persons were registered in May, while 96.3k were removed from the register.

Near and Far Abroad: What Drives Export Growth?

When macroeconomists think about the factors shaping foreign trade flows, they usually focus on two elements:

• Domestic factors: this refers to domestic supply (and, to a lesser extent, also demand), as well as economic policy. Undoubtedly, an increase in the country’s productive capacity (a positive supply shock) tends to raise output volumes and lower export prices, thereby increasing the volume of foreign trade. Meanwhile, interventions in the FX market can improve the price competitiveness of exports through a depreciation of the domestic currency.
• External factors: here the main issue is demand abroad (and, to a lesser extent, also supply). If foreign economic conditions remain weak, demand for exported goods and services will also remain subdued. As a result, the volume of foreign trade grows more slowly.

Can the behaviour of Polish exports also be successfully described using such a conceptual model? Broadly speaking, yes — but such a description would omit the structurally most important feature of Poland’s international trade, namely its exceptionally deep integration into the EU single market. As it turns out, in the year of accession to the EU, the share of EU countries in Poland’s exports jumped by 10 percentage points, and at present as much as three-quarters of total Polish exports go to the Union.

In such a situation, it is reasonable to assume that conditions in the “near abroad” (i.e. in the EU) will have a much stronger impact on the growth of Polish exports than global conditions. Interesting arguments in support of this thesis are provided by P. Galiński and J. Mućk of the NBP, who in a recently published article identified three types of shocks shaping Polish exports:

• Domestic (changes in demand and supply in the domestic economy, export-specific shocks, and exchange-rate adjustments)
• External (changes in demand and supply among Poland’s EU trading partners)
• Global (global, i.e. non-EU, demand and supply shocks, as well as the uncertainty shock)

What follows from the distinction between shocks coming from the “nearer” and the “more distant” external environment?

• With regard to the export collapse after 2008: the episode in question was driven primarily by global factors, which ultimately also led to a cooling of European demand.
• With regard to the export collapse after 2020: while the pandemic slowdown in exports had a complex structure, the post-COVID rebound was above all driven by strong demand from the EU, which was later hit by Russia’s aggression against Ukraine in 2022.
• More generally: intra-EU economic integration does not immunise European economies against the effects of global shocks. What is more, the higher the import intensity of exports, the greater the economy’s exposure to absorbing shocks from abroad (both nearer and more distant) through the cost-push transmission mechanism.

Decomposition of Polish export growth (% y/y) by individual shock contributions (pp)

Source: Galiński and Mućk 2026; arrows by Pekao Research

The study clearly shows that historically the sharpest changes in export volumes were triggered by global uncertainty shocks (reflected in the behaviour of the VIX equity volatility index). In the chart above, this can be seen in the sizeable purple areas after 2008 and after 2020. In other words, even the deepest integration into intra-EU trade cannot shield Poland from global waves of uncertainty. Secondly, the navy areas after 2022 show that the rise in European demand significantly shaped the growth of Polish exports after the pandemic, a process that was only brought to an end by Russia’s attack on Ukraine. Finally, it is worth mentioning the important — though dispersed — role of domestic supply shocks (the red bars scattered across the chart). These are probably the key factor behind short-term fluctuations in Polish export volumes.

Can any diagnosis for the future of Polish exports be formulated based on these findings? Probably yes; in our view, it would be as follows: despite its deepening integration with the EU internal market, Poland must be prepared for “jumps” in export volumes triggered by global uncertainty shocks. Elevated volatility in global markets and a tense geopolitical situation (including the ongoing wars in Ukraine and Iran) mean that the probability of uncertainty shocks — whether positive or negative — is also elevated. Meanwhile, as Galiński and Mućk point out, it is precisely the occurrence of such global disturbances that accompanies the largest-amplitude changes in export growth dynamics.

Financial markets update

Before and after the weekend, strong tailwinds have been blowing on risk asset markets. Since Thursday afternoon, the zloty has strengthened by about 2 figures against the euro (and 5 figures against the dollar), while yields on Polish Treasuries have fallen by about 15 basis points, not counting today’s opening. We won’t be surprised if today’s session further improves this result, the more so since, from a technical standpoint, interest rate markets appear well-positioned for further declines in rates. On key benchmarks, we’re seeing breakouts from technical formations or breaches of important support levels (e.g. the head and shoulders pattern on 5Y PLN swap rate). We are closer to the end of the war in the Gulf than at any point in the last (almost) four months. If the zloty is to strengthen further, when, if not now? Additionally, a lower trajectory for oil prices means a lower trajectory for inflation and more robust economic growth. From the perspective of the country’s credit risk, this is also positive news. We therefore view the coming days as bringing a strengthening of domestic assets. Domestic factors in the form of macroeconomic data and Treasury bond auction will take the back seat.