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    Central Bank Forecasts Inflation to Decline While Economic Growth Shows Promise

    The National Bank of Poland (NBP) has released its latest report on inflation, providing insights into the country’s economic outlook. According to the central bank’s projections, the Consumer Price Index (CPI) inflation is expected to reach 11.9 percent for the current year and 5.2 percent for 2024. Furthermore, the report indicates that GDP growth is anticipated to be at 0.6 percent this year and 2.4 percent in the following year.

    The NBP’s central projection also includes estimates for core inflation, which are projected to be 10.5 percent for the current year and 6.1 percent for the next year. These figures suggest a gradual decrease in inflation over the coming years.

    Based on the report, the annual price dynamics are predicted to fall within a range of 11.1 to 12.7 percent for 2023, with a 50 percent probability, compared to the March 2023 projection of 10.2 to 13.5 percent. For 2024, the range is expected to be between 3.7 and 6.8 percent (previously 3.9 to 7.5 percent), while for 2025, the projected range is 2.1 to 5.1 percent (previously 2.0 to 5.0 percent).

    Regarding GDP growth, the NBP’s projections suggest a range of -0.2 to 1.3 percent for 2023, with a 50 percent likelihood, compared to the previous projection of -0.1 to 1.8 percent. For 2024, the projected range is 1.4 to 3.3 percent (previously 1.1 to 3.1 percent), and for 2025, it is expected to be between 2.1 and 4.4 percent (previously 2.0 to 4.3 percent).

    The report emphasizes that CPI inflation in Poland is expected to decrease in the coming years. It notes that “within the projection horizon, core inflation will decrease.” However, it also acknowledges some uncertainty regarding inflation prospects, with some members of the NBP Council highlighting the possibility of inflation dynamics exceeding the central projection and others emphasizing the likelihood of a faster decline in inflation.

    On a positive note, the report highlights optimistic news for economic growth. Fiscal measures, including the increase in the childcare benefit (Family 500 Plus program) from 500 zł to 800 zł starting in 2024, the permanent introduction of the fourteenth pension, and state support for first-home purchases through the “Safe Credit 2%” program, are expected to have a positive impact on economic growth in 2024-2025, according to the NBP.

    The report also mentions that the labor market situation remains favorable, with low unemployment rates, high employment levels, and continued growth in nominal wages. However, it points out that the weakening economic activity is leading to a decline in job vacancies, limited employment and wage growth, with real wages remaining lower than the previous year.

    The NBP’s report provides valuable insights into the projected path of inflation and economic growth in Poland. It underscores the central bank’s efforts to monitor and manage key economic indicators to ensure stability and promote sustainable development in the country’s economy.

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