Inflation and economic growth projection of …...Inflation and economic growth projection of the...
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Economic Analysis Department
Warsaw / 9th March 2020
Inflation and economic growth projection
of Narodowy Bank Polski
based on the NECMOD model
Inflation and economic growth projection of the NBP
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Polish economy
▪ GDP
- Consumption demand
- Investment demand
- Foreign trade
- Changes between
rounds
▪ Inflation
- Changes between
rounds
Uncertainty
Outline:
2
1 Projection 2020 - 2022
2 Uncertainty
Outline
Inflation and economic growth projection of the NBP 3
March projection compared to November projection – main changes
Impact on GDP Impact on CPI
Weaker global economy outlook due to the outbreak of coronavirus epidemic
Signing Phase One deal between US and China
Lower than expected economic growth in Poland in 2019Q4
Households have become more cautious about spending
Stronger than expected in November increase in prices of waste disposal services
Higher than assumed in the budget bill excise tax on alcoholic beverages and tobacco
products from 1st January 2020 and planned introduction of additional fees on beverages
containing substances used for their sweetening properties, as well as additional fees on
sales of alcoholic beverages of up 300ml in volume
Higher pork prices growth in global markets in 2019-2020 due to the escalation of the ASF
epidemic and slower than expected process of rebuilding the pig herd in China
Higher than expected increases in tariffs on the sale and distribution of electrical energy
Inflation and economic growth projection of the NBP 4
The impact of coronavirus outbreak on the global economy and Poland
▪ Assumptions in the baseline scenario of the projection: significant slowdown in GDP growth in China and the global economy,
however, concentrated mainly in the first and beginning of the second quarter of this year.
▪ The most important canals of coronavirus epidemic impacting global economy:
▪ Slump in global demand for transport, tourism and entertainment services - hence – lower oil prices leading to deterioration of
economic outlook in countries dependent on the income from sales of this commodity.
▪ Decrease in demand for non-food goods, so far mainly in China and north Italy, later probably also in other countries.
▪ Heightened volatility in financial markets, deterioration in business sentiment.
▪ In the immediate vicinity of Poland: slowdown in services sector in some big euro area economies and in manufacturing sector
in Germany.
▪ A risk of further reduction of manufacturing production and quarantine of more regions in China, difficulties in global value chains,
obstacles for producers worldwide dependent on Chinese subcomponents.
▪ In case of more severe coronavirus epidemic – deeper downward revision in the forecast for economic growth in Poland (pessimistic
scenario – see the balance of risks).
▪ Further spread of the coronavirus epidemic will most likely lead to lower inflation:
▪ lower inflation will be a result of decreasing demand for a large part of services and non-food goods, intensification of promotions
and extraordinary price reductions
▪ the supply effect, related to a reduction in the supply of some intermediate goods and an increase in demand for some food
products, may be conducive to rising inflation.
Inflation and economic growth projection of the NBP 5
Impact of stronger demand and wage pressure on core inflation in line with expectations.
Core inflation projection in subsequent projection rounds (y/y, %)
-0.5
0
0.5
1
1.5
2
2.5
3
16q1 16q3 17q1 17q3 18q1 18q3 19q1 19q4
core inflation Nov 19 Jul 19 Mar 19 Nov 18
Jul 18 Mar 18 Nov 17 Jul 17 Mar 17
Source: NBP calculations
Inflation and economic growth projection of the NBP
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Polish economy
▪ GDP
- Consumption demand
- Investment demand
- Foreign trade
- Changes between
rounds
▪ Inflation
- Changes between
rounds
Uncertainty
Outline:
6
Projection 2020-2022
Economic conditions abroad
Inflation and economic growth projection of the NBP 7
External GDP growth will remain sluggish in the coming years
Import dynamics in the global economy (%, y/y, 3-m. average)
Source: Datastream, Markit Economics, OECD, CPB Netherlands, NBP calculations.
Global GDP (%, annualized q/q)
GDP y/y, % 2020 2021 2022
Euro area 0.9 (1.1) 1.3 (1.3) 1.3
Germany 0.6 (0.6) 1.3 (1.2) 1.2
Great Britain 1.1 (1.2) 1.0 (1.3) 1.3
US 1.9 (1.7) 1.8 (1.7) 1.9
China 5.1 (5.8) 6.5 (5.7) 5.7
NBP forecast (values from the November 2019 projection are given in brackets)
Signing trade agreement Phase One between China and United
States.
Monetary and fiscal loosening in the global economy.
Spread of coronavirus epidemic.
Prolonging period of slowdown in Germany.
Increase in trade barriers between Great Britain and European
Union from 2021.
-2
0
2
4
6
2017 2018 2019
US JapanEuro area ChinaAsian emerging markets Other economiesGlobal economy
0
1
2
3
4
5
2013 2014 2015 2016 2017 2018 2019 2020P 2021P
Indicators with values higher than in the November projection are marked green, and indicators with lower values are marked red.
Inflation and economic growth projection of the NBP 8
In the euro area the GDP growth remains sluggish, however economic conditions in various sectors
differ.
Source: Eurostat, European Commission, Markit Economics, Datastream, NBP calculations
Business climate in the euro area (PMI, p.) Wages and employment in the euro area
Investment in machinary and equipment vs Eurozone exports of goods
(index, 2015=100) GDP growth in the euro area (% and p.p., y/y)
Note: The chart does not include Ireland.
-0.5
0.0
0.5
1.0
2017 2018 2019Private consumption Public consumption GFCF
Change in inventories Net exports GDP
45
48
50
53
55
58
60
2018 2019 2020
Manufacturing Services Construction
6
7
8
9
10
11
12
13
-3
-2
-1
0
1
2
3
4
2005 2007 2009 2011 2013 2015 2017 2019
Employment (%, y/y) - LHS Wages (%, y/y) - LHS Unemployment rate (%) - RHS
-20
-15
-10
-5
0
5
10
15
2007 2009 2011 2013 2015 2017 2019
Investment in machinery and equipment Export of goods
Inflation and economic growth projection of the NBP 9
Economic growth in the United States will be lower than in recent years.
Source: BEA, BLS, US Census, NAHB, CBO, ISM, NBER, NBP calculations.
GDP dynamics in US
(% and p.p, q/q saar)
ISM Index for manufacturing and services (points, sa)Private investment outlays dynamics (%, and p.p. q/q, saar)
Rate of unemployment and its natural level according to CBO (%, sa)
-3-2-10123456
2017 2018 2019Private consumption GFCF
Changes in inventories Net exports
Public investment GDP
3
4
5
6
7
8
9
10
11
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
Rate of unemployment Natural rate of unemployment
30
35
40
45
50
55
60
65
2007 2009 2011 2013 2015 2017 2019
Manufacturing Services
-9
-6
-3
0
3
6
9
12
15
2014 2015 2016 2017 2018 2019
Residential construction Intellectual propertyMachinery and equipment Non-residential investmentTotal private investment
Inflation and economic growth projection of the NBP 10
Trade agreement betweeen China and US as well as ratification of USMCA trade deal reduce
uncertainty related to trade policy.China’s exports to the United States (%, 3m-average y/y)
Source: US Census, USTR, NBP calculations.
Share of US exports to Canada and Mexico (% of total exports from US) and share of
imports from Canada nad Mexico to US
(% of total US imports) in 2019
Duties imposed by US on China*
Value of additional Chinese imports from the United States according to
the first stage of agreement (mld USD)
0
5
10
15
0
2
4
6
Jul-18 Sep-18 Nov-18 Jan-19 Mar-19 May-19 Jul-19 Sep-19 Nov-19
Value of duties imposed by US (bn USD, LHS)
Share of duties value in the value of Chinese export toUS (%, RHS)
*) Duties imposed from July 2018 (the beginning of „trade war”)
-0.4
-0.2
0
0.2
0.4
2017 2018 2019
Dynamics of exports on which tariffes have been imposed since 2018
Dynamics of exports on which tariffes have not been imposed since 2018
0
25
50
75
100
125
2020 2021
Manufacturing Agriculture Energy Services0
5
10
15
20
Canada MexicoExports Imports
Inflation and economic growth projection of the NBP
However the spread of coronavirus remains the risk factor.
11
Source: WHO, CDC, ECDC, NHC, DXY, JHU CCSE, WEO, Capital Economics, NBP calculations.
Share of China in the global GDP
(%, according to purchasing power parity)
Coal consumption in Chinese power plants against the data
for recent years
Confirmed COVID-19 cases (number) Assumptions of the impact of coronavirus on GDP growth in selected
economies (%)
0
2
4
6
8
10
12
14
16
18
20
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018
0
1 000
2 000
3 000
0
30 000
60 000
90 000
22.01.2020 30.01.2020 07.02.2020 15.02.2020 23.02.2020
China (LHS)
Rest of the world (RHS)
-2.0
-1.5
-1.0
-0.5
0.0
2020q1 2020q2 2020q3 2020q4
Germany Other EA countries China
Inflation and economic growth projection of the NBP
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Polish economy
▪ GDP
- Consumption demand
- Investment demand
- Foreign trade
- Changes between
rounds
▪ Inflation
- Changes between
rounds
Uncertainty
Outline:
12
Polish economy
Gross domestic product
Inflation and economic growth projection of the NBP 13
Marked decline in GDP growth in Poland at the end of 2019
Values from the November projection are given in
brackets (19Q4 seasonally adjusted).
Indicators with values higher than in the
November projection are marked green, and
indicators with lower values are marked red.
19q3 19q4
March proj.
(GUS 27 Nov)
November
projection
March
projection
November
projection
GUS (28
Feb)
GDP (y/y) (%) 3,9 (4,0) 3,1 (3,9) 3,2
Domestic demand (y/y) (%) 3,3 (4,1) 3,5 (4,4) 2,2
Household consumption (y/y) (%) 3,9 (4,3) 3,6 (4,4) 3,3
Public consumption (y/y) (%) 4,7 (5,6) 4,2 (6,1) 3,1
Gross fixed capital form. (y/y) (%) 4,7 (5,8) 7,1 (4,1) 4,9
Exports (y/y) (%) 5,0 (3,5) 3,4 (2,4) 1,4
Imports (y/y) (%) 3,9 (3,6) 4,3 (3,2) -0,7
Net exports contribution (pp.) 0,8 (-0,1) -0,4 (-0,4) 1,1
Source: GUS data, NBP calculations.
-6
-4
-2
0
2
4
6
8
10
12
-6
-4
-2
0
2
4
6
8
10
12
09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 18q1 19q1
Industrial and constr. production y/y Retail sales y/y
Real wage fund in corporate sector y/y GDP y/y
38
42
46
50
54
58
-30
-20
-10
0
10
20
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
pkt
Bal
ance
betw
een
the
perc
enta
ges
of
posi
tive
and
nega
tive
answ
ers
PMI Poland and general business climate indicators (GUS) in manufacturing, construction and trade (s.a.)
manufacturing construction trade PMI Poland (RHS)
Inflation and economic growth projection of the NBP 14
-3
-2
-1
0
1
2
3
4
5
6
7
-3
-2
-1
0
1
2
3
4
5
6
7
19q1 20q1 21q1 22q1 22q4
Consumption Gross fixed capital formation
Change in inventories Net exports
GDP
In the quarters to come, GDP growth will remain subdued due to weak economic conditions abroad
and a slowdown in EU funds absorption dynamics.
Private consumption, supported by legislative and fiscal
changes to be the main growth factor in the forecast horizon.
Slowdown in gross fixed capital formation dynamics as the
result of:
curbing general government investment
decrease in private investment growth due to
weakening demand, external in particular and a
decline in EU funds absorption growth
Decrease in net exports’ contribution to GDP growth in the
forecasting horizon.
y/y, % 2019 2020 2021 2022
GDP 4.0 3.2 3.1 3.0
Source: GUS data, NBP calculations.
Inflation and economic growth projection of the NBP
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Polish economy
▪ GDP
- Consumption demand
- Investment demand
- Foreign trade
- Changes between
rounds
▪ Inflation
- Changes between
rounds
Uncertainty
Outline:
15
Consumption demand
Inflation and economic growth projection of the NBP 16
Household consumption :
Spread-out effect of fiscal changes, which increase expenditures
on social benefits and lower tax burden – the highest impact on
consumption in 2020.
Still favourable, from the point of view of employees, labour market
conditions – relatively fast wage growth, increase in minimum
wage. In the longer term the wage fund growth is expected to
slow down due to the weakening demand for labour.
Smoothing the path of consumption in longer projection horizon,
in line with lower households’ propensity to consumption in
recent quarters.
Public consumption :
Teachers’ wage hikes of 9,6% in September 2019.
Average annual increase in wages in the public sector of 6% in
2020.
In 2021 a rise in contributions paid from the salaries of public sector
employees due to their accession to PPK.
Neutral fiscal policy assumed in the longer projection horizon.
Consumption demand remains the main driver of GDP growth over the projection horizon
y/y, % 2019 2020 2021 2022
Household
consumption3.9 3.7 3.7 3.6
Public consumption 4.5 4.4 3.8 2.4
-4
-2
0
2
4
6
8
-4
-2
0
2
4
6
8
13q1 14q1 15q1 16q1 17q1 18q1 19q1 20q1 21q1 22q1 22q4
Household consumption (y/y, %)
Public consumption (y/y, %)
Consumption forecast
Source: GUS data, NBP calculations.
Inflation and economic growth projection of the NBP 17
Good financial situation of households, however consumers has been cautious about spending.
Increased fear of being unemployed.
Values from the November projection are given in brackets (19Q4 seasonally adjusted).
Indicators with values higher than in the November projection are marked green, and indicators
with lower values are marked red.
Financial situation of households and fear of being unemployed
-40
-20
0
20
40
60
80
100
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
current financial situation of households
financial situation of households in the next 12 months
fear of being unemployed
-50
-40
-30
-20
-10
0
10
20
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
current (BWUK, s.a.) leading (WWUK, s.a.)
Consumer confidence indicators
19q3 19q4
ULC (r/r, %) 3.7 (2.8) 4.1 (3.2)
Labour productivity (y/y,%) 3.9 (4.4) 2.8 (3.8)
Gross wages (y/y, %) 7.7 (7.1) 6.9 (6.9)
Real wages (y/y, %) 4.7 (4.2) 3.9 (4.0)
Employment LFS (y/y, %) 0.0 (-0.3) 0.3 (0.1)
Unemployment rate LFS (%) 3.2 (3.5) 3.0 (3.6)
Participation rate (%) 56.2 (56.3) 56.1 (56.3)
Source: GUS data, NBP calculations.
Inflation and economic growth projection of the NBP 18
Decline in households real disposable income dynamics in 2020-2022 along with smoothing
consumption path.
-2
0
2
4
6
8
-2
0
2
4
6
8
19q1 20q1 21q1 22q1 22q4
Net transfers and taxes excl. 500 plus
500 plus
Wage fund
Property income
Operating surplus
Disposable income (y/y, %)
Disposable income decomposition (constant prices) (y/y, %)
-2
0
2
4
6
8
-2
0
2
4
6
8
13q1 14q1 15q1 16q1 17q1 18q1 19q1 20q1 21q1 22q1 22q4
Household consumption (y/y, %)
Disposible income (constant prices) (y/y) (%)
Consumption and households’ disposable income
Economic Sentiment Index (s.a.)
60
70
80
90
100
110
120
2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Euro Area Germany Poland
Source: GUS data, NBP calculations.
Inflation and economic growth projection of the NBP 19
Hitherto strong labour demand is weakening due to lowering economic growth.
Vacancies and a share of surveyed companies reporting difficulties in finding
new employees as a barrier for expansion
LFS employment by sectors (s.a., y/y, %)
The demand for labour - GUS research (levels in thousands s.a. and trend)
0%
2%
4%
6%
8%
10%
12%
0
50 000
100 000
150 000
200 000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
number of vacancies within a month, s.a., LFS
number of non-subsidised vacancies within a month,s.a., LFS
scarce human resources - RHS
Employment in the corporate sector
0
50 000
100 000
150 000
200 000
250 000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
net job creation vacancies newly created jobs liquidated jobs
-1%
0%
1%
2%
3%
4%
5%
5,400
5,600
5,800
6,000
6,200
6,400
6,600
2012 2013 2014 2015 2016 2017 2018 2019 2020
y/y - LHS level - RHS
-4.3%
1.3%
-0.2%
-8%
-4%
0%
4%
8%
12%
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
AgricultureManufacturing and constructionServicesSectors other than agriculture
Source: GUS data, NBP Quick Monitoring Survey, NBP Annual Survey, NBP calculations.
Inflation and economic growth projection of the NBP 20
Slump in unemployment rate in 2019 mainly due to negative demographic tendencies.
Weakening labour demand will result in lowering employment and gradual increase in unemployment rate.
Factors contributing to the change of unemployment rateRegistered and LFS unemployment rate (s.a.)
Forecasted numer of employed immigrants in Poland (thousands
54
55
56
57
58
-1
0
1
2
3
13q1 14q1 15q1 16q1 17q1 18q1 19q1 20q1 21q1 22q1 22q4
Employment (y/y, %) Participation rate (%, RHS)
Employment and participation rate forecast
7.0%
5.2%
0%
3%
6%
9%
12%
15%
18%
21%
2000 2002 2004 2006 2008 2010 2012 2014 2016 2018 2020 2022
LFS unemployment rate
LFS unemployment rate forecast
registered unemployment rate
3,2%
-6.0
-3.0
0.0
3.0
2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Changes in participation rate
LFS employment
LFS population
LFS unemployment rate changes (y/y, p.p.)
178 196 281379
568792
8911 010 984 973 967
7 54
6
21
5164
77 87 96 104
62 6673
79
88
102
121
136 145 152 159
0
500
1000
1500
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022Th
ousands
Effective number of immigrants excl. UA and BY
Effective number of employed immigrants from BY
Effective number of employed immigrants from UA
Number of employed immigrants in PL
Source: GUS data, NBP calculations, NBP estimates based on data from Ministry of Foreign Affairs, ZUS and the Office for Foreigners.
Inflation and economic growth projection of the NBP 21
Unfavourable demographic changes on the labour market mitigated by migration.
306
248616 687
237327
349
1 032 626706
1 824
1 582
1 769
0
500
1000
1500
2000
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019*
Tho
us.
agriculture
industry
construction
services
Total
190 240
110
-40-55
-15
45
12 5
43 35
68
5
-98
-100
-50
0
50
100
150
200
250
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Tho
us.
2018: 695 thous. Poles
staying in Great Britain
(temporary stay)
Estimation of temporary emigration from Poland to Great Britain – changes in thous. y/y
Structure of statements on employing a foreigner (in thous.)
Source: data from Ministry of Foreign Affairs , Office for Foreigners ,GUS, Ministry of Family, Labour and Social Policy, NBP calculations.
*) estimates based on the report for the first half of the year 2019.
Note: Changes in visa regulations and statement system since 2018, data for 2010-2017
not comparable.
0.0%-0.2%
-0.5%-0.3%
-1.5%
-0.8%
-1.1%
-0.5%
0.1%-0.1% 0.0%
0.3%
-0.4%
0.5%
-0.5%
0.2%
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
2012 2013 2014 2015 2016 2017 2018 2019
Population LFS 25-60/65 y/y
Population LFS 25-60/65 + UA immigrants y/y
1.9%1.4%
0.7%
1.4%
0.4%
-0.2%
0.3%
0.0%
2.4%2.0%
1.8%
2.7%
0.9%
0.4%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
2.5%
3.0%
2012 2013 2014 2015 2016 2017 2018 2019
Employment LFS y/y
Employment LFS + UA workers y/y
Inflation and economic growth projection of the NBP 22
Source: GUS, NBP Quick Monitoring Survey, MF, NBP calulations.
Decreasing wages dynamics due to weaker labour demand, in 2020-2021 this proces will be curbed by
the increase in minimum wage growth.
Wages growth y/y vs labour market index
(%, last data for 2019Q4)
0
2
4
6
8
10
0
2
4
6
8
10
13q1 14q1 15q1 16q1 17q1 18q1 19q1 20q1 21q1 22q1 22q4
Nominal wages (y/y, %)Real wages (y/y, %)Labour productivity (y/y, %)ULC (y/y, %)
Wage growth and unit labour cost forecast (y/y, %)Share of companies planning wage increases
0.00
0.02
0.04
0.06
0.08
0.10
0.12
-0.02
0
0.02
0.04
0.06
0.08
0.1
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Nominal wages in enterprise sector (y/y, LHS)
Nominal wages (y/y, LHS)
Real wages (y/y, LHS)
Labour market index RHS
0%
2%
4%
6%
8%
10%
0%
10%
20%
30%
40%
50%
2007 2008 2009 2010 2011 2012 2013S
etk
i
percentage of enterprises planning increases (left axis)percentage of employees s.a. (left axis)percentage of enterprises planning significant increases (left a.)
growth of avarage wage (right axis)
7.1%
0%
1%
2%
3%
4%
5%
6%
7%
8%
9%
2014
2015
2015
2015
2016
2016
2016
2017
2017
2017
2018
2018
2018
2019
2019
2019
Nominal wages in enterprise sector - y/y
4-month moving average
Jan 20
Nominal wages in the enterprise sector (current prices, y/y, %)
Inflation and economic growth projection of the NBP
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Polish economy
▪ GDP
- Consumption demand
- Investment demand
- Foreign trade
- Changes between
rounds
▪ Inflation
- Changes between
rounds
Uncertainty
Outline:
23
Investment demand
Inflation and economic growth projection of the NBP 24
Public investment :
Lower capital expenditure of local government units in the coming years.
Construction of highways and railway planned for 2020.
A peak in EU funds absorption for public investment in 2020, marked
decrease in the following years.
Private investment :
Still weak growth of external demand.
Diminishing contribution of EU funds absorption for private sector
investment to growth (negative in 2022).
Gradual lowering of residential investment growth.
Low degree of automation and robotization of manufacturing in Poland as
well as growing labour costs due to planned legislative changes –
incentives to faster automation of production and services along with
decreasing employment in the longer horizon.
Low interest rates.
Gross fixed capital formation growth will slow down due to lower EU funds absorption growth, as
well as the deceleration of private investment growth.
-4
-2
0
2
4
6
8
10
12
14
-4
-2
0
2
4
6
8
10
12
14
19q1 20q1 21q1 22q1 22q4
GFCF private sector
GFCF public sector
GFCF
y/y, % 2019 2020 2021 2022
Gross fixed capital formation 7.8 4.1 1.7 0.4
Source: GUS data, NBP calculations.
Inflation and economic growth projection of the NBP 25
Investment spending of local government units (y/y, %) Contributions to public investment growth (current prices, y/y, %)
Public investment expenditures (bn PLN) Use of EU funds – for public investment and for businesses (bn PLN)
After a slump of nominal public investment growth to close to zero in 2019, in 2020 slight rebound is
expected.
-60
-40
-20
0
20
40
60
80
100
2008q1
2009q1
2010q1
2011q1
2012q1
2013q1
2014q1
2015q1
2016q1
2017q1
2018q1
2019q1
lata wyborcze
rok po wyborach
* - initial data (NBP estimate)
F – NBP forecastSource: GUS, Eurostat, MF, MIiR, NBP calculations.
0
20
40
60
80
100
120
outturn
outturn
outturn
outturn
outturn
outturn
*X
I 2019
III 2020
XI 2019
III 2020
XI 2019
III 2020
2014 2015 2016 2017 2018 2019 2020F 2021F 2022F
national EU
election year
post-election year
0
5
10
15
20
25
30
35
2016 2017 2018 2019* 2020F 2021F 2022F
Public investmentIII 2020
XI 2019
Funds forenterprises III 2020
XI 2019
-30
-20
-10
0
10
20
30
40
2013 2014 2015 2016 2017 2018 2019* 2020F 2021F 2022F
local governments other total
Inflation and economic growth projection of the NBP 26
Decomposition of NFC’s investment growth by firms’ share of revenues
from export (p.p, y/y, current prices)
Source: GUS F-01, NBP Quick Monitoring Survay, NBP calculations.
Deteriorating private investment outlook in 2020-2022 due to still low external demand dynamics.
Expected change in investment spending and export activity
(balance of changes, p.p., s.a.)
-20-15-10
-505
1015202530
2014 2015 2016 2017 2018 2019
no exports 1-49% 50%+
-5
0
5
10
15
2014 2015 2016 2017 2018 2019 2020
quarterly - no exports quarterly - exporterannual - no exports annual - exporter
24.2
24.6
20.5
15.8
17.9
17.1
13.1
9.3
12.4
29.5
29.7
31.1
0 10 20 30 40 50 60 70 80 90 100
2018
2019
2020
production capacity modernization cost reduction renovation, replacement other
Purpose of new investment (% enterprises)
-5
0
5
10
15
20
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
non-exporters non-specialized exporters specialized exporters
Indicators of demand forecast (p.p.)
Inflation and economic growth projection of the NBP
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Polish economy
▪ GDP
- Consumption demand
- Investment demand
- Foreign trade
- Changes between
rounds
▪ Inflation
- Changes between
rounds
Uncertainty
Outline:
27
Foreign trade
Inflation and economic growth projection of the NBP 28
-4
-3
-2
-1
0
1
2
3
4
5
-20
-15
-10
-5
0
5
10
15
20
25
13q1 14q1 15q1 16q1 17q1 18q1 19q1 20q1 21q1 22q122q4
Net exports contribution(p.p., RHS)
Exports (y/y) (%)
Imports (y/y) (%)
In 2020-2022 current and capital account will deteriorate.
y/y p.p. 2019 2020 2021 2022
Net exports
contribution to growth0.4 0.2 -0.2 0.0
Net exports’ contribution to GDP growth
-6
-4
-2
0
2
4
6
8
-6
-4
-2
0
2
4
6
8
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
Compensation of employees & Remittances
Primary income (excl. Compensation of employees)
Capital account & Secondary income (excl. Remittances)
Goods and services
Current and capital account (% GDP)
Current and capital account (% GDP)
Source: GUS data, WIOD, NBP calculations.
Inflation and economic growth projection of the NBP 29
Marked increase in the significance of export of services in recent years.
Source: GUS data, NBP data, WTO data, NBP calculations.
Share of Poland in the global trade (%)
Structure of export of services in Poland, % GDP
0.4
0.6
0.8
1.0
1.2
1.4
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
Export of goods Import of goods
Export of services Import of services
0
2
4
6
8
10
12
2010
2011
2012
2013
2014
2015
2016
2017
2018
cha
nge 2
01
0-2
018
Other
Construction services
Repair
Refinement
Telecom., information and computer services
Other business services
Foreign travel
Transport services
-7
-5
-3
-1
1
3
5
2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
Goods Services Primary income
Secondary income Current account
Current account deficit ( % GDP, 4 quarters moving sum)
Inflation and economic growth projection of the NBP
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Polish economy
▪ GDP
- Consumption demand
- Investment demand
- Foreign trade
- Changes between
rounds
▪ Inflation
- Changes between
rounds
Uncertainty
Outline:
30
Gross Domestic Product – changes between projection
rounds
Inflation and economic growth projection of the NBP 31
March GDP projection compared to November projection
Stronger than expected slowdown in households’ consumption
growth in the 2nd half of 2019 – households have become more
cautious about purchasing.
Lower path of inventories due to weeker than expected domestic
economic growth.
Downward revision of global economic growth in 2020, in particular
in the euro area.
Lower imports dynamics due to weeker than expected domestic
demand.
Higher resistance of Polish exports to persisting slowdown in the
euro area.
GDP y/y, % 2019 2020 2021
November 2019 4.3 3.6 3.3
March 2020 4.0 3.2 3.1
p. p.
-1.2
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
-1.2
-1.0
-0.8
-0.6
-0.4
-0.2
0.0
0.2
0.4
0.6
0.8
2019 2020 2021
Private consumption Public consumption
Gross capital formation Net exports
GDP
-1
0
1
2
3
4
5
6
7
8
-1
0
1
2
3
4
5
6
7
8
16q1 17q1 18q1 19q1 20q1 21q1 21q4
y/y, %
90% 60% 30% Nov 19 Mar 20
Source: GUS data, NBP calculations.
Inflation and economic growth projection of the NBP
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Polish economy
▪ GDP
- Consumption demand
- Investment demand
- Foreign trade
- Changes between
rounds
▪ Inflation
- Changes between
rounds
Uncertainty
Outline:
32
Inflation
Polish economy
Inflation and economic growth projection of the NBP 33
In 2019Q4 higher inflation mainly due to the increase in food prices dynamics and core inflation
driven by a hike in services prices.
Source: GUS, NBP data.
CPI and core infaltion (y/y, % monthly data)
Food and energy prices growth (y/y, %)
Values from the November projection are given in brackets (seasonally adjusted).
Indicators with values higher than in the November projection are marked green, whereas indicators with lower
values are marked red.
y/y, % 19q4
CPI inflation 2.8 (2.8)
Core inflation 2.7 (2.7)
Food prices 6.5 (6.4)
Energy prices -2.3 (-2.0)
7.7
3.7
-8
-4
0
4
8
12
2013 2014 2015 2016 2017 2018 2019 2020
Food and non-alcoholic beverages Energy
4.4
3.2
-2
0
2
4
6
2013 2014 2015 2016 2017 2018 2019 2020
CPI Inflation target Core inflation
Main core inflation components dynamics (y/y, %)
*
*
*
*) Data for January 2020 based on flash estimates of GUS.
0.8
11.4
4.3
-2
0
2
4
6
8
10
12
2016 2017 2018 2019 2020
Core inflation Non-food goods Administered services
Market services Supercore inflation
*
*
*
Inflation and economic growth projection of the NBP 34
Food prices increased in 2019Q4 due to supply factors, whereas in case of services’ prices –
demand-cost effects were strengthen by strong administered prices changes.
Source: GUS data, NBP data.
Monthly growth of meat prices (incl. pork and cured meat) in 2019
against 2005-2018
Food prices decomposition in 2019
(as compared to the previous quarter, p.p., y/y)
Decomposition of the growth of services prices in 2019
(as compared to the previous quarter, p.p., y/y)Administered services growth (December of the last year = 100)
0
1
2
3
4
5
6
7
8
9
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
20152016201720182019
-3
-2
-1
0
1
2
3
4
Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec
2005-2017
2018
2019
0.0
0.5
1.0
1.5
19q1 19q2 19q3 19q4
Administered services Communication
Recreation and culture Restaurants and hotels
Other services Total services
-2
-1
0
1
2
3
4
19q1 19q2 19q3 19q4
Meat Fruit Vegetables Other Food and non-alcoholic beverages
Inflation and economic growth projection of the NBP 35
After marked increase in 2020, in the following years CPI inflation will decrease to slightly below 2,5% at
the end of the projection horizon.
In 2020 delayed impact of elevated labour costs dynamics and
positive output gap, afterwards a decline in demand and cost
pressure along with a slowdown in GDP growth.
Temporary increase in food prices due to supply constraints (growth
of meat and cured meat as a consequence of ASF epidemy in
China, higher fruit and vegetables prices in the 1st half of 2020 due
to last year unfavourable meteorological conditions).
Hike in electricity prices from 2020 (higher tariffs for households as
well as introduction of capacity charge, in 2021-2022 significantly
lower scale of electricity prices’ hikes).
Waste disposal charges hikes, which are planned or already
implemented by local governments lead to higher services prices
dynamics in 2020 and the 1st half of 2021.
Higher excise duty on alcohol and tabacco products from January
2020.
Relatively low level of energy commodity prices on the global
markets and decreasing prices of agricultural commodities.
Low level of inflation in the main trading partners countries.
y/y, % 2019 2020 2021 2022
CPI inflation 2.3 3.7 2.7 2.4
-2
-1
0
1
2
3
4
5
-2
-1
0
1
2
3
4
5
13q1 14q1 15q1 16q1 17q1 18q1 19q1 20q1 21q1 22q122q4
Core inflation Food prices
Energy prices CPI inflation
Source: GUS data, NBP calculations.
Inflation and economic growth projection of the NBP 36
Source: GUS data, Bloomberg data, NBP
calculations.
CPI inflation in 2020 affected by regulatory changes and supply constraints.
0
50
100
150
200
250
300
350
WA
RS
ZA
WA
PŁO
CK
GD
YN
IA
RY
BN
IK
SK
IER
NIE
WIC
E
BY
TO
M
GD
AŃ
SK
PR
ZE
MY
ŚL
RZ
ES
ZÓ
W
KIE
LCE
KA
TO
WIC
E
PIŁ
A
ZA
MO
ŚĆ
BY
DG
OS
ZC
Z
SO
SN
OW
IEC
OP
OLE
BIA
ŁYS
TO
K
SA
NO
K
PIO
TR
KÓ
W T
RY
B.
SZ
CZ
EC
IN
KR
OS
NO
SIE
DLC
E
GLI
WIC
E
Hike in waste disposal charge in selected cities in the first half of 2020 (%)
Note: Only cities with an increase in the waste disposal charge in 2020H1 are
included in the chart.
Energy prices and its forecast
Note: In the chart CPI electrical energy is a single-base index of ecectrical
energy prices (January 2015 = 100, data for 2020 is a forecast).
88
93
98
103
108
113
0
50
100
150
200
250
300
2015 2016 2017 2018 2019 2020
RDN index (PLN/MWh)
Electricity prices CPI (RHS)
Inflation and economic growth projection of the NBP 37
Expected drop in domestic demand and cost pressure in 2021-2022.
-3
-2
-1
0
1
2
3
4
5
6
-3
-2
-1
0
1
2
3
4
5
6
13q1 14q1 15q1 16q1 17q1 18q1 19q1 20q1 21q1 22q122q4
Output gap (% potential output)
GDP (y/y, %)
Potential output (y/y, %)
-1
0
1
2
3
4
5
6
-1
0
1
2
3
4
5
6
TFP Capital
NAWRU Economically active pop.
Potential output (y/y, %)
-2
0
2
4
6
8
-2
0
2
4
6
8
13q1 14q1 15q1 16q1 17q1 18q1 19q1 20q1 21q1 22q1 22q4
Nominal wages (y/y, %) Labour productivity (y/y, %)
ULC (y/y, %)
-6
-4
-2
0
2
4
6
8
-6
-4
-2
0
2
4
6
8
13q1 14q1 15q1 16q1 17q1 18q1 19q1 20q1 21q1 22q122q4
r/r, %Import prices excl. oil and gas prices (y/y, %)Import prices (y/y, %)
Source: GUS data, NBP calculations.
Inflation and economic growth projection of the NBP 38
Expected lower demand for energy commodities due to coronavirus epidemic.
Global oil production, consumption and change in stocks (milion b/d)
Market crude oil inventories in the US (mln b/d)
Prices of energy and agricultural commodities in the projection – Energy
commodity prices index (USD, 2011=1), agricultural commodity prices index
(EUR, 2011=1) and crude oil prices (USD/b) in the projection
Changes in production of crude oil and liquid fuels in the world (mln b/d)
20
40
60
80
100
120
140
0.2
0.4
0.6
0.8
1.0
1.2
1.4
13q1 14q1 15q1 16q1 17q1 18q1 19q1 20q1 21q1 22q1 22q4
Energy commodities (LHS) Agricultural commodities (LHS)
Brent oil (RHS)
-2
-1
0
1
2
3
4
5
6
92
96
100
104
108
2015 2016 2017 2018 2019 2020 2021 2022
Implied global change in stocks (million b/d)
Global oil production (million b/d)
Global oil consumption (million b/d)
-2.5
-2.0
-1.5
-1.0
-0.5
0.0
0.5
1.0
1.5
2.0
2019 2020 2021
OPEC North America
Eurasia Latin America
Other Non-OPEC
350
400
450
500
550
600
2015 2016 2017 2018 2019 2020 2021
US inventories
Source: data - GUS, Bloomberg, Reuters, EIA, NBP calculations.
Monthly range from January 2015 to December 2019
Inflation and economic growth projection of the NBP
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Polish economy
▪ GDP
- Consumption demand
- Investment demand
- Foreign trade
- Changes between
rounds
▪ Inflation
- Changes between
rounds
Uncertainty
Outline:
39
Inflation – changes between projection rounds
Inflation and economic growth projection of the NBP 40
March CPI projection compared to November projection
CPI y/y, % 2019 2020 2021
November 2019 2.3 2.8 2.6
March 2020 2.3 3.7 2.7
p.p.
Stronger than expected in November increase in prices of waste
disposal services.
Higher than assumed in the budget bill excise tax on alcoholic beverages
and tobacco products as of 1 January 2020.
Higher pork prices growth at the turn of 2019-2020 due to the escalation
of the ASF epidemic and slower than expected process of rebuilding the
pig herd in China.
Planned introduction of the so-called „sugar tax” as of 1 July 2020.
Higher than expected increases in tariffs on the sale and distribution of
electrical Energy.
Weaker demand pressure in the economy due to slower than expected
in the previous projection GDP growth in 2020-2021.y/y, %
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
2019 2020 2021
-0.2
0.0
0.2
0.4
0.6
0.8
1.0
Core inflation Food prices
Energy prices CPI inflation
-2
-1
0
1
2
3
4
5
6
-2
-1
0
1
2
3
4
5
6
16q1 17q1 18q1 19q1 20q1 21q1 21q4
90% 60% 30%
Nov 19 Mar 20 inflation target
Source: GUS data, NBP calculations.
Inflation and economic growth projection of the NBP
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Polish economy
▪ GDP
- Consumption demand
- Investment demand
- Foreign trade
- Changes between
rounds
▪ Inflation
- Changes between
rounds
Uncertainty
Outline:
41
Uncertainty
▪ Risk factors
▪ Fan charts
Inflation and economic growth projection of the NBP 42
Risk area Description ImpactScale of
impact
Deterioration in the
global economic
outlook
▪ Longer and possibly more dramatic course of the coronavirus epidemic in China and its outbreak in other
countries (disruption in global value chains, problems with the supply of many technologically advanced
products, slowdown in manufacturing sector in China and its main trading partners, declining confidence of
foreign investors, stronger outflow of capital from China and a downward pressure on the Chinese juan, a
sustained slowdown in global trade and marked deterioration in business sentiment). In the extreme case
disruption in production, restrictions in the flow of people and goods transport.
▪ Escalation of current trade disputes leading to larger disturbances in the global trade, deterioration of
global economic conditions, elevated uncertainty and tensions in the financial markets (still some crucial
issues to be resolved between the United States and the European Union: subsidies for the manufacture of
large passenger airplanes, digital tax, automobile industry).
▪ Lack of a Brexit deal regulating future mutual trade relations between UE and UK (increase in uncertainty
and lower economic growth both in the UK and the EU).
▪ Large susceptibility of developing countries to global shocks and debt crises in some of these countries.
▪ Decrease in oil and other energy commodities prices.
Inflation
GDP **
Better global
economic conditions
▪ Faster control of the coronovirus outbreak.
▪ Lack of further escalation of trade disputes and a gradual rebound of global trade could bring about faster
growth in the global economy than assumed in the central scenario of the projection.
▪ More expansionary fiscal policy in some european countries.
▪ Higehr oil and other energy commodities prices.
Inflation
GDP *
Lower natural gas
prices in Poland
▪ Possible finalization in 2020 of negotiations between PGNiG and Gazprom regarding lowering of contract
prices of natural gasInflation
GDP *
Summary Inflation GDP
Inflation and economic growth projection of the NBP 43
GDP
y/y, %
central
path
50% probability
interval
2020 3.2 2.5 3.9
2021 3.1 2.1 4.0
2022 3.0 1.9 3.8
CPI
y/y, %
below
1.5%
below
2.5%
below
3.5%
below
centr.
path
within
1.5-3.5%
range
2020 0% 7% 43% 51% 42%
2021 20% 45% 72% 51% 52%
2022 31% 55% 78% 53% 47%
CPI
y/y, %
central
path
50% probability
interval
2020 3.7 3.1 4.2
2021 2.7 1.8 3.6
2022 2.4 1.3 3.4
CPI inflation y/y, % GDP y/y, %
-2
-1
0
1
2
3
4
5
6
7
-2
-1
0
1
2
3
4
5
6
7
17q1 18q1 19q1 20q1 21q1 22q1 22q4
90% 60% 30% Central path Inflation target
-1
0
1
2
3
4
5
6
7
8
-1
0
1
2
3
4
5
6
7
8
17q1 18q1 19q1 20q1 21q1 22q1 22q4
90% 60% 30% Central path
Source: GUS data, NBP calculations.