Poland’s GDP statistics for the full year 2023 will be released today, and the fourth quarter should also be known. We expect modest growth of 0.4% and further recovery this year, with growth expected to be 3.0%. Otherwise, the CEE regional calendar doesn’t have much to offer. But there’s still some buzz in the area this week.
Poland is still waiting for the president to sign the government’s new budget for this year. Yesterday, the Prime Minister raised the topic of early elections if the President blocks the budget. But at this point I think this is more political rhetoric than a real possibility. In the Czech Republic, there are two days left until the start of the power outage period ahead of next week’s meeting of the Czech National Bank (CNB). We have already heard several statements from the board and more is expected today or tomorrow. However, for now, the CNB is expected to maintain a cautious stance and cut rates again by only 25 basis points. EU budget negotiations continue in Hungary ahead of tomorrow’s EU summit. Yesterday, we saw some headlines about trying to find a consensus, but so far no consensus has been reached. The situation is very uncertain, but we expect an agreement to be reached before the EU summit.
Yesterday, the foreign exchange market rebounded strongly across the board due to the HUF and Hungarian National Bank’s interest rate decisions. However, the market appears to have recouped some of the previous day’s losses and reversed its position. Against this backdrop, we do not see any improvement in the fundamentals, so we do not expect the rally to continue at the pace seen yesterday, especially in the Czech Koruna market. On the other hand, PLN still has room to fall further towards 4.340 EUR/PLN, as explained earlier. In our view, an increase in market interest rates, or at least an improvement in the interest rate differential with the euro market, leaves room for the zloty to appreciate, unless political headlines turn negative.
František Taborski
