Inflation projection of Narodowy Bank Polski based on the ... · Inflation projection of the NBP...

Economic Institute

Warsaw / 13 July 2015

Inflation projection of Narodowy Bank Polski

based on the NECMOD model

Introduction

Changes between

rounds

Projection 2015 - 2017

Uncertainty

Outline:

Inflation projection of the NBP based on the NECMOD model 2

1 Changes between projection rounds

2 Projection 2015 - 2017

3 Uncertainty

Outline

Introduction

Changes between

rounds


Uncertainty

Outline:


Changes between projection rounds

Changes in the projection assumptions

July projection compared to March projection


■ External environment:

■ Forecast for GDP growth abroad revised slightly upwards.

■ Higher forecast of global agricultural commodities prices, although still at their

historically low level.

■ GDP data for 2015Q1 above expectations from the March projection, with a

sharper growth in gross fixed capital formation, a high positive contribution of

net exports, outweighed by a strongly negative contribution of changes in

inventories.

■ Higher dynamics of employment and nominal wages in 2015Q1.

■ Lower than expected domestic food prices inflation (the effect of stronger

impact of high supply of agricultural commodities on food prices in Poland).

■ NBP reference interest rate lower by 50 p.p.

Changes in the projection assumptions


-1

0

1

2

3

4

5

6

7

8

-1

0

1

2

3

4

5

6

7

8

12q1 12q3 13q1 13q3 14q1 14q3 15q1 15q3 16q1 16q3 17q1 17q4

y/y, % 90% 60% 30% Mar 15 Jul 15

July GDP projection compared to March projection

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2015 2016 2017

Change in inventories Net exports

Gross fixed cap. formation Public consumption

Private consumption GDP


July CPI inflation projection compared to March projection

-2

-1

0

1

2

3

4

5

-2

-1

0

1

2

3

4

5

12q1 12q3 13q1 13q3 14q1 14q3 15q1 15q3 16q1 16q3 17q1 17q4

y/y, % 90% 60% 30% Mar 15 Jul 15 inflation target

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

-0.6

-0.4

-0.2

0.0

0.2

0.4

0.6

0.8

2015 2016 2017

Core inflation Food prices

Energy prices CPI inflation

Introduction

Changes between

rounds


Uncertainty

Outline:


Projection for 2015-2017

Projection scenario

Economic conditions abroad

Aggregate demand

Inflation


■ Economic growth based on increasing consumption and private investment, while net exports

remain negative.

■ Private consumption growth supported by good situation on the labour market and low price

dynamics.

■ Output gap closing gradually (negative since mid-2012) and remaining close to zero in 2016-

2017.

■ Low energy commodities prices on the global markets.

■ Deflation in most quarters of 2015, afterwards positive price dynamics however below the

inflation target.

■ The CPI inflation growth in the longer term will be hampered by low demand pressure, low

import prices resulting from only a moderate economic recovery in the euro area and low

commodity prices on the global markets.

Projection scenario

Introduction

Changes between

rounds


Uncertainty

Outline:


Economic conditions abroad


GDP in the euro area in 2015Q1

Change in GDP (%, q/q) GDP in 2015Q1 (%, q/q)

Source: Eurostat, Bloomberg

• Private consumption remain the main source for GDP

growth.

• Negative contribution of net exports to growth in most

countries of EA.

• Lower GDP growth than expected in Germany in

2015Q1, mainly due to lower inventories.

• However in many countries (FR, IT, ES) economic

growth above market expectations.

-1.0

-0.5

0.0

0.5

1.0

1.5

EA DE FR IT ES NL

Public consumption Private consumption

Gross fixed capital formation Changes in inventories

Net exports GDP

-0.2

0.0

0.2

0.4

0.6

0.8

1.0

EA DE FR IT ES NL

2014Q3 2014Q4 2015Q1 Market consensus for 15q1


The situation of households in the euro area

• Private consumption in the euro area supported by the

ongoing improvement on the labour market.

• The rise in employment expected in the forecast horizon

will be the main driving force of the wage fund increase,

while no wage pressure is foreseen (in the environment of

low inflation and decreasing, although still high rate of

unemployment).

Source: Eurostat, Ameco

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

2010 2011 2012 2013 2014 2015 (f) 2016 (f)

Structure of compensation of employees real growth, %

Employees, persons Real wages per employee

Compensation of employees

-1.0

-0.5

0.0

0.5

1.0

2012 2013 2014 2015

Sectoral structure of employment growth (y/y, %)

Agriculture, forestry and fishing Industry (except construction)

Construction Services

Total employment -3

-2

-1

0

1

2

3

4

2007 2008 2009 2010 2011 2012 2013

Growth of gross disposable income in the euro area (y/y, %)

Nominal growth of the adjusted gross disposable income per capita

Real growth of the adjusted gross disposable income per capita


Investment outlays of enterprises in the euro area

Source: AMECO, Eurostat

Unfavourable factors for investment:

• uncertainty,

• low rate of demand growth,

• demographic factors,

• ongoing residential market adjustments on the majority of big economies.

The increase in investment outlays in the euro area will remain

moderate in the short-term.

40

45

50

55

60

65

2010 2011 2012 2013 2014 2015

PMI Composite (3-month average)

EA DE FR IT ES

-2.5

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

2012 2013 2014 2015

Sectoral structure of investment growth in the euro area (q-o-q, p.p.)

Total Construction (gross) Other investment

Gross fixed capital formation


Investment outlays of enterprises in the euro area

18%

19%

20%

21%

22%

23%

24%

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Rate of investment in the euro area (% GDP)

Source: Eurostat

-15%

-10%

-5%

0%

5%

10%

15%

2011 2012 2013 2014 2015

Investment outlays growth in main euro area economies (y/y)

EA DE ES FR IT

Inflation projection of the NBP based on the NECMOD model

4

5

6

7

8

IV I II III IV I II III IV I II III IV I II III

2016 Indie 2011 2012 2012 2013

dane rzeczywiste prognoza Bloombergactual data Bloomberg forecast

14

Emerging economies GDP growth (%, y/y)

China Russia Brazil

-2

-1

0

1

2

3

4

5

-2

-1

0

1

2

3

4

5

I III I III I III I III I III I III

2011 2012 2013 2014 2015 2016

-6

-4

-2

0

2

4

6

-6

-4

-2

0

2

4

6


2011 2012 2013 2014 2015 2016

6

7

8

9

10

11

6

7

8

9

10

11


2011 2012 2013 2014 2015 2016

3

4

5

6

7

8

9

3

4

5

6

7

8

9

II III IV I II III IV I II III IV I II III IV I II III IV

2012 2013 2014 2015 2016

India


-6

-5

-4

-3

-2

-1

0

1

2

3

4

-6

-5

-4

-3

-2

-1

0

1

2

3

4

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q117q4

% III 2015 VII 2015

GDP abroad (similar)

-8

-6

-4

-2

0

2

4

6

8

-8

-6

-4

-2

0

2

4

6

8

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

Euro area Germany

United States United Kingdom%


0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

4.5

5.0

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q117q4

% III 2015 VII 2015

Interest rates abroad (similar)

0

1

2

3

4

5

6

7

0

1

2

3

4

5

6

7

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

Euro area United States United Kingdom

Introduction

Changes between

rounds


Uncertainty

Outline:


Aggregate demand

Consumption demand

Government demand

Investment demand

Foreign trade


GDP and its components – 2014 Q4 and 2015 Q1

14q4 15q1

GDP (y/y) (%) 3.3 (3.2) 3.6 (3.2)

Domestic demand (y/y) (%) 5.0 (4.5) 2.6 (4.2)

Private consumption (y/y) (%) 3.0 (3.1) 3.1 (3.0)

Public consumption (y/y) (%) 6.0 (3.4) 3.3 (3.6)

Gross fixed capital formation (y/y) (%) 8.6 (9.6) 11.4 (6.8)

Exports (y/y) (%) 5.6 (3.8) 8.0 (3.2)

Imports (y/y) (%) 9.5 (6.7) 6.0 (5.5)

Net exports contribution (p.p.) -1.5 (-1.2) 1.1 (-1.0)

Values from the March projection are given in brackets (seasonally adjusted).

Indicators with values higher than in the March projection are marked green, whereas indicators with lower values are marked red.

Introduction

Changes between

rounds


Uncertainty

Outline:


Consumption demand


Labour market – 2014 Q4 and 2015 Q1

14q4 15q1

ULC (y/y) (%) 1.8 (2.1) 1.9 (1.3)

Labour productivity (y/y) (%) 1.4 (1.2) 1.9 (1.9)

Gross wages (y/y) (%) 3.1 (3.2) 4.1 (3.1)

Total employment LFS (y/y) (%) 1.9 (2.0) 1.7 (1.2)

Unemployment rate LFS (%) 8.3 (8.5) 8.0 (8.4)

Participation rate (%) 56.2 (56.4) 56.3 (56.4)




Number of job offers (in tous.) Flows to and from employment

High probability of finding a job, along with high number of vacancies

0

23

45

68

90

113

135

20

07

20

08

20

09

20

10

20

11

20

12

20

13

20

14

20

15

subsidized (sa)

unsubsidized (sa)

In May 2015 the number of job offers amounted to

the highest level since February 2008.

Steady increase in the number of unsubsidized

offers.

Further increase in the probability of finding a job.

Diminishing risk of job loss.

Source: MPiPS

Source: BAEL, NBP estimates

0.0%

0.5%

1.0%

1.5%

2.0%

2.5%

0%

2%

4%

6%

8%

10%

12%

14%

16%

18%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

U->E (sa) LHS E->U (sa) RHS


Share of enterprises planning wage increases Real wages in the enterprises sector

Pronunced upward trend in the number of vacancies relative to the number of

people looking for jobs, however low share of enterprises planning wage

increases

0.00

0.01

0.02

0.03

0.04

0.05

2007

2008

2009

2010

2011

2012

2013

2014

2015

-6%

-4%

-2%

0%

2%

4%

6%

8%

10%

Real wages y/y (sa) - LHS

Labour market tighteness index (sa) - RHS

Further increase in labour market tighteness index

measuring tensions on the labour market (the ratio of

vacancies to a number of people looking for a job).

Such high values observed for a last time in the first

half of 2008.

Decrease in the real wages in the enterprises sector

in two recent months.

The number of enterprises planning wage increases

remain stable, however wage increases apply to a

smaller share of employed persons.

0

5

10

15

20

25

30

35

40

45

50

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

share of enterprises (s.a.) share of the employed (s.a.)

mean value


-2

0

2

4

6

-2

0

2

4

6

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q117q4

y/y, % Employment

III 2015 VII 2015

Labour market

6

8

10

12

14

6

8

10

12

14

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q117q4

% Unemployment rate

III 2015 VII 2015

2

4

6

8

10

12

2

4

6

8

10

12

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q117q4

y/y, % Real wages

III 2015 VII 2015

53

54

55

56

57

53

54

55

56

57

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q117q4

% Participation rate

III 2015 VII 2015


Wage pressure

Low wage pressure (NBP Quick Monitor.), ULC

In the first half of 2015 wage pressure remained low

and relatively stable.

Almost half of the population of enterprises report no

wage pressure.

-2

0

2

4

6

8

10

12

-2

0

2

4

6

8

10

12

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

y/y, % III 2015 VII 2015

Unit labour cost (ULC)

(higher)

0

10

20

30

40

50

60

70

2011 II

2011 III

2011 IV

2012 I

2012 II

2012 III

2012 IV

2013 I

2013 II

2013 III

2013 IV

2014 I

2014 II

2014 III

2014 IV

2015 I

2015 II

increased pressure no changes no pressure


Labour market in the CEE peers

4

6

8

10

12

14

16

2007 2008 2009 2010 2011 2012 2013 2014 2015

Unemployment rate (sa, %)

CZ HU RO SK PL

-2

-1

0

1

2

3

4

2012 2013 2014 2015

Employment (y/y, %)

CZ HU PL SK


Consumer sentiment

Consumer confidence indicators

Current purchases and intentions of purchases

Continuation of the upward trend of the most important

consumer confidence indicators, despite some slowdown

observed in May 2015.

-50

-40

-30

-20

-10

0

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

current (s.a.) leading (s.a.)

-50

-40

-30

-20

-10

0

10

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Major purchases currently made (s.a.)

Major purchases in the next 12 months (s.a.)

Past and future financial situation of households

Source: NBP data

-35

-30

-25

-20

-15

-10

-5

0

5

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

Financial situation of households in recent 12 months (sa)

Financial situation of households in the next 12 months (sa)


-1

0

1

2

3

4

5

6

7

-1

0

1

2

3

4

5

6

7

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

y/y, % III 2015 VII 2015

Consumption demand

Private consumption

(higher)

-1

0

1

2

3

4

5

6

7

-1

0

1

2

3

4

5

6

7

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

y/y, % III 2015 VII 2015

Real gross disposable income

(higher in the short term, lower in the long term)

Introduction

Changes between

rounds


Uncertainty

Outline:


General government expenditure


4

6

8

10

12

14

16

18

20

4

6

8

10

12

14

16

18

20

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q117q4

PLN bn III 2015 VII 2015

EU transfers absorption

0

10

20

30

40

50

60

70

80

0

10

20

30

40

50

60

70

80

2013 2014 2015 2016 2017

PLN bn

Human capital Agricul. Fund for Rural Dev.

Other expend., mainly enterprises Public sector current expenditure

Common Agricultural Policy Public sector capital investment

EU transfers


Public consumption and investment

-10

-5

0

5

10

15

-10

-5

0

5

10

15

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

y/y, % III 2015 VII 2015

-40

-30

-20

-10

0

10

20

30

-40

-30

-20

-10

0

10

20

30

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

y/y, % III 2015 VII 2015

Public consumption Public investment*

*Reclassification of PKP PLK to the GG sector since 2014 led to changes in public investment dynamics in 2014, and taking into account

expected path of rail investment outlays, also in the projection horizon – particularly at the turn of 2016/2017.

Introduction

Changes between

rounds


Uncertainty

Outline:


Investment demand


Investment demand

Source: NBP Quick Monitoring Survey

Forecasts of demand, production and orders (sa, y/y, %) Capacity utilisation

-15

-10

-5

0

5

10

15

20

25

30

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

fixed component of demand (sa) demand (sa)

orders (sa) production (sa)

-8

-6

-4

-2

0

2

4

6

8

10

12

65

67

69

71

73

75

77

79

81

83

85

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

y/y (RHS) capacity utilization

capacity utilization s.a. long-term avg.


Investment outlays of enterprises

33

Planned changes in investment outlays within a quarter and

in the current year, y/y (NBP Quick Monitor.)

New investment indicator (share of enterprises planning

to commence new investment within a quarter, NBP

Quick Monitoring Survey)

-15

-10

-5

0

5

10

15

2012 2013 2014 2015

annual plans

annual plans (major change balance)

quarterly plans

quarterly plans (major change balance)

-60

-40

-20

0

20

40

60

80

10

15

20

25

30

35

40

45

2005 2007 2009 2011 2013 2015

new investment indicator y/y (rhs) indicator s.a.

new investment indicator mean value


-15

-10

-5

0

5

10

15

20

25

-15

-10

-5

0

5

10

15

20

25

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

y/y, % III 2015 VII 2015

Gross fixed capital formation (higher in the short horizon)

-2

0

2

4

6

8

10

12

-2

0

2

4

6

8

10

12

14q1 14q3 15q1 15q3 16q1 16q3 17q1 17q4

GFCF enterprises GFCF public sector GFCF housing

Introduction

Changes between

rounds


Uncertainty

Outline:


Foreign trade


High exports profitability

Exports profitability The value of euro exchange rate which make export

unprofitable

Source: NBP Quick Monitoring Survey

0

5

10

15

20

25

30

0

2

4

6

8

10

12

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

share of unprofitable exports in exports revenues (LHS)

share of exporters with unprofitable exports (RHS)

3.00

3.25

3.50

3.75

4.00

4.25

4.50

4.75

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

average

+/- 0.5 std.dev.

actual euro exchange rate


However low exports dynamics

Indicator of export contracts and export forecast

Source: NBP Quick Monitoring Survey, EC

-20

-10

0

10

20

30

40

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

export contracts indicator (sa)

export forecast indicator (sa)

new export contracts indicator (sa)

2

5

8

11

14

2010 2011 2012 2013 2014 2015 2016

Autumn 2014 Winter 2015

Spring 2015

Global exports of goods and services, volume

(percentage change on preceding year) – European

Commission forecasts revisions


Foreign trade Global exports dynamics

Source: CPB Netherlands Bureau for Economic Policy Analysis, Eurostat, International trade center, Duval et al. (2014)

Global imports dynamics

-3

0

3

6

9

12

15

2011 2012 2013 2014 2015

World

Advanced economies

Emerging economies

-3

0

3

6

9

12

15

2011 2012 2013 2014 2015

World

Advancedeconomies

Euro area trade dynamics

-10

-5

0

5

10

15

20

2011 2012 2013 2014 2015

intra exports

extra exports

total imports

Trends in global value chains


4

4.2

4.4

4.6

4.8

5

5.2

5.4

4

4.2

4.4

4.6

4.8

5

5.2

5.4

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

III 2015 VII 2015

Foreign trade

Real effective exchange rate (REER) (stronger)


-4

-3

-2

-1

0

1

2

3

4

5

-20

-15

-10

-5

0

5

10

15

20

25

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

Net exports contribution (p.p., RHS)

Exports (y/y) (%)

Imports (y/y) (%)

Net exports contributions

-3

-2

-1

0

1

2

3

4

-3

-2

-1

0

1

2

3

4

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

p.p. III 2015 VII 2015


-3

-2

-1

0

1

2

3

4

5

6

-3

-2

-1

0

1

2

3

4

5

6

14q1 14q3 15q1 15q3 16q1 16q3 17q1 17q4

Consumption Gross fixed capital formation

Change in inventories Net exports

GDP

GDP (higher)

0

1

2

3

4

5

6

7

0

1

2

3

4

5

6

7

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

y/y, % III 2015 VII 2015


Private consumption and investment outlays in the CEE peers

42

-6

-4

-2

0

2

4

6

8

2011 2012 2013 2014 2015

Private consumption (y/y, %)

CZ HU PL RO SK

-15

-10

-5

0

5

10

15

20

2011 2012 2013 2014 2015

Inwestment outlays (y/y, %)

CZ HU PL RO SK

Introduction

Changes between

rounds


Uncertainty

Outline:


Inflation


CPI inflation – I half of 2015



15q1 15q2*

CPI inflation (y/y) (%) -1.5 (-1.2) -1.0 (-0.6)

Core inflation (y/y) (%) 0.4 (0.5) 0.3 (0.4)

Food prices inflation (y/y) (%) -3.7 (-3.0) -2.3 (-0.9)

Energy prices inflation (y/y) (%) -4.6 (-4.2) -3.6 (-3.5)

* Assuming that IE experts’ inflation forecast is correct.


0.6

0.7

0.8

0.9

1.0

1.1

1.2

0.6

0.7

0.8

0.9

1.0

1.1

1.2

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

EUR, 2011=1 III 2015 VII 2015

Commodity prices

Index of energy commodity prices

(similar)

Index of agricultural commodity prices

(higher)

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

1.1

1.2

1.3

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

USD, 2011=1 III 2015 VII 2015


Crude oil prices

The global supply, consumption and inventories of crude oil

OPEC crude oil supply (million b/d)

OECD crude oil inventories

Source: Department of Energy, US

-1

0

1

2

3

4

5

85

87

89

91

93

95

97

2011 2012 2013 2014 2015 2016

Change in inventories (RHS) Global supply (million b/d)

Global supply (million b/d)

2500

2600

2700

2800

2900

3000

3100

2011 2012 2013 2014 2015 2016

February, 2015 June, 2015

29

30

31

32

2012 2013 2014 2015 2016

February, 2015 June, 2015


Inflation in the euro area 47

VA deflator and output gap in the euro area

-1%

0%

1%

2%

3%

4%

5%

6%

7%

8%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Wage dynamics, ULC and core inflation (y/y)

ULC

Compensation per employee

Core inflation

-2

-1

0

1

EA DE ES FR IT

HICP inflation (y/y, p.p.) in major euro area countries

Dec-15 Jan-15 Feb-15 Mar-15 Apr-15

1.4

1.5

1.6

1.7

1.8

1.9

2.0

2.1

2.2

2.3

2.4

Jan 14 Apr 14 Jul 14 Oct 14 Jan 15 Apr 15

Inflation swap 5y/5y (p.p.)

-4%

-3%

-2%

-1%

0%

1%

2%

3%

4%

5%

0%

1%

1%

2%

2%

3%

3%

4%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015p

2016p

2017p

GVA deflator - lhs Output gap - rhs


Non-energy industrial goods inflation in Poland and in the

euro area

Inflation spillovers between Poland and the euro area (negative

values suggest that non-energy industrial goods inflation in the

euro area influence non-energy industrial goods inflation in

Poland)

48

Inflation of goods in Poland influenced by the inflation in the EA

-3

-2

-1

0

1

2

3

2008 2009 2010 2011 2012 2013 2014 2015

strefa euro Polska

-60

-50

-40

-30

-20

-10

0

2008 2009 2010 2011 2012 2013 2014 2015

-25

-15

-5

5

15

25

2008 2009 2010 2011 2012 2013 2014 2015-2

0

2

4

6

2008 2009 2010 2011 2012 2013 2014 2015

strefa euro Polska

HICP inflation in Poland and the euro area

Inflation spillovers between Poland and the euro area (negative values

suggest that HICP inflation in the euro area influence HICP inflation in

Poland)

EA Poland

EA Poland


Deceleration of the downward trend of the producer price index

49

PPI

-6%

-4%

-2%

0%

2%

4%

6%

105

106

107

108

109

110

111

112

113

Ma

y 1

2

Jul 12

Se

p 1

2

Nov 1

2

Jan

13

Ma

r 1

3

Ma

y 1

3

Jul 13

Se

p 1

3

Nov 1

3

Jan

14

Ma

r 1

4

Ma

y 1

4

Jul 14

Se

p 1

4

Nov 1

4

Jan

15

Ma

r 1

5

Ma

y 1

5

Dynamics y/y (RHS)Index 2010=100S.A.Trend

• In recent months there has been a deceleration

of the downward trend of the producer price

index, which has been lasting since May 2012.

• The main reason for producer prices levelling off

is curbing the downward trend and an increase

in global crude oil prices in 2015.

• Year-on-year producer prices dynamics in May

rose by 0.5 p.p., to 2.2% y/y.

• The highest contribution to y-o-y growth of PPI

has manufacturing processing (-2.3 p.p.).

• In April year-on-year PPI domestic market

dynamics and PPI export market dynamics were

close to PPI composite growth.

Source: GUS, IE.

-5-3-113579

111315

Jan

12

Ap

r 12

Jul 12

Oct

12

Jan

13

Ap

r 13

Jul 13

Oct

13

Jan

14

Ap

r 14

Jul 14

Oct

14

Jan

15

Ap

r 15

PPI y/y composite

PPI y/y export market

PPI y/y domestic market


Inflation expectations, 12 months horizon

50

-2

-1

0

1

2

3

4

5

6

7

8

-2

-1

0

1

2

3

4

5

6

7

8

Jan-0

4

Ma

y-0

4

Sep-0

4

Jan-0

5

Ma

y-0

5

Sep-0

5

Jan-0

6

Ma

y-0

6

Sep-0

6

Jan-0

7

Ma

y-0

7

Sep-0

7

Jan-0

8

Ma

y-0

8

Sep-0

8

Jan-0

9

Ma

y-0

9

Sep-0

9

Jan-1

0

Ma

y-1

0

Sep-1

0

Jan-1

1

Ma

y-1

1

Sep-1

1

Jan-1

2

Ma

y-1

2

Sep-1

2

Jan-1

3

Ma

y-1

3

Sep-1

3

Jan-1

4

Ma

y-1

4

Sep-1

4

Jan-1

5

Ma

y-1

5

The range of acceptable deviations from the inflation target

Current inflation Inflation target

Consumers - objectified measure Enterprises - objectified measure

Analists of the financial sector - median Consumers - main subjectified measure

Consumers - alternative subjectified measure


-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

-0.5

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

4.0

14q1 14q3 15q1 15q3 16q1 16q3 17q1 17q4

Population Capital TFP

Labour market Potential output

Potential output

-3

-2

-1

0

1

2

3

4

5

6

-3

-2

-1

0

1

2

3

4

5

6

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

Output gap (% potential output)

GDP (y/y) (%)

Potential output (y/y) (%)


Import prices and foreign exchange rate

-6

-4

-2

0

2

4

6

8

10

12

14

16

-6

-4

-2

0

2

4

6

8

10

12

14

16

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

y/y, % III 2015 VII 2015

Import prices

(higher in the short horizon)

4.0

4.2

4.4

4.6

4.8

5.0

5.2

5.4

4.0

4.2

4.4

4.6

4.8

5.0

5.2

5.4

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

III 2015 VII 2015

Real effective exchange rate (REER) (stronger)


-6

-4

-2

0

2

4

6

8

10

12

-6

-4

-2

0

2

4

6

8

10

12

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

y/y, % Food prices inflation (%)

Energy prices inflation (%)

Domestic inflation

-2

-1

0

1

2

3

4

5

-2

-1

0

1

2

3

4

5

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

y/y, % CPI inflation (%) Core inflation (%)


CPI inflation (y/y, %)

-2

-1

0

1

2

3

4

5

-2

-1

0

1

2

3

4

5

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

y/y (%) III 2015 VII 2015

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

14q1 14q3 15q1 15q3 16q1 16q3 17q1 17q4

Core inflation Food prices

Energy prices CPI inflationy/y (%)

Introduction

Changes between

rounds


Uncertainty

Outline:


Uncertainty

Risk factors

Fan charts

Introduction

Changes between

rounds


Uncertainty

Outline:


Risk factors


■ Higher growth of domestic demand in Poland supported by stronger economic activity in the euro area (the effect of

the ECB’s quantitative easing, looser fiscal policy, and – in the longer term – implementation of structural reforms),

resulting in higher agricultural and energy commodities prices – optimistic scenario

■ Economic slowdown in Poland stemming from deterioration in the global economic conditions, especially in the

euro area (in case Greece declares insolvency) and in China. Followed by the increase in uncertainty on the global

financial markets, rise in the Polish Treasury bonds yields, exchange rate depreciation – pessimistic scenario

Scale of recovery abroad and in Poland

-3

-2

-1

0

1

2

3

4

5

-3

-2

-1

0

1

2

3

4

5

11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

0

1

2

3

4

5

6

0

1

2

3

4

5

6

11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

CPI inflation (y/y, %) GDP growth (y/y, %)


Euro area – terms of public debt financing

58

Source: Eurostat, Stooq

0

5

10

15

20

25

30

35

40

2010 2011 2012 2013 2014 2015

10Y bond spread to Bund

GR IT ES PT FR

0

20

40

60

80

100

120

140

160

180

200

GR IT PT IE ES FR EA

Public debt in 2014 (% GDP)


Greece

59

-16

-14

-12

-10

-8

-6

-4

-2

GR IE ES PT SI CY

Budget deficit in 2009 and 2014 (% GDP)

2009

2014

Source: Eurostat, Ameco

0.0

0.1

0.2

0.3

0.4

0.5

0.6

0.7

0.8

0.9

1.0

2008 2009 2010 2011 2012 2013 2014 2015

Composite Indicator of Systemic Risk

GR ES IE IT PT

Source: own calc. based on ECB data


Pessimistic scenario – economic

conditions abroad

60

-8

-6

-4

-2

0

2

4

6

-8

-6

-4

-2

0

2

4

6

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

y/y, %

GDP growth abroad

pessim. VII 2015

0.0

0.5

1.0

1.5

2.0

2.5

0.0

0.5

1.0

1.5

2.0

2.5

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q117q4

y/y, % VA deflator abroad

pessim. VII 2015

3.2

3.4

3.6

3.8

4.0

4.2

4.4

4.6

3.2

3.4

3.6

3.8

4.0

4.2

4.4

4.6

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q117q4

EUR/PLN exchange rate

pessim. VII 2015


Pessimistic scenario – GDP

0

1

2

3

4

5

6

7

8

0

1

2

3

4

5

6

7

8

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

y/y, % pessim. VII 2015

-3

-2

-1

0

1

2

3

4

5

6

-3

-2

-1

0

1

2

3

4

5

6

14q1 14q3 15q1 15q3 16q1 16q3 17q1 17q4

Spożycie ogółem Nakłady na środki trwałe

Przyrost zapasów Eksport netto

PKB

Change in inventories

Consumption

GDP

GFCF

Net exports


Pessimistic scenario – inflation

-2

-1

0

1

2

3

4

5

-2

-1

0

1

2

3

4

5

08q1 09q1 10q1 11q1 12q1 13q1 14q1 15q1 16q1 17q1 17q4

y/y (%) pessim. VII 2015

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

-2.0

-1.5

-1.0

-0.5

0.0

0.5

1.0

1.5

2.0

14q1 14q3 15q1 15q3 16q1 16q3 17q1 17q4

Inflacja bazowa Ceny żywności

Ceny energii Inflacja CPI

Core inflation

Energy prices

Food prices

CPI inflation

Introduction

Changes between

rounds


Uncertainty

Outline:


Fan charts


-3

-2

-1

0

1

2

3

4

5

-3

-2

-1

0

1

2

3

4

5

12q1 12q3 13q1 13q3 14q1 14q3 15q1 15q3 16q1 16q3 17q1 17q4

90% 60% 30% central path inflation target

CPI inflation projection – July 2015

below

1.5%

below

2.5%

below

3.5%

below

central path

in the range

(1.5-3.5%)

15q2 1.00 1.00 1.00 0.50 0.00

15q3 1.00 1.00 1.00 0.49 0.00

15q4 0.88 0.98 1.00 0.48 0.12

16q1 0.54 0.80 0.94 0.47 0.40

16q2 0.47 0.72 0.89 0.47 0.42

16q3 0.43 0.67 0.86 0.48 0.43

16q4 0.46 0.69 0.87 0.49 0.41

17q1 0.50 0.72 0.88 0.51 0.39

17q2 0.51 0.73 0.89 0.52 0.37

17q3 0.50 0.72 0.88 0.53 0.38

17q4 0.48 0.70 0.86 0.52 0.39


-1

0

1

2

3

4

5

6

7

8

-1

0

1

2

3

4

5

6

7

8

12q1 12q3 13q1 13q3 14q1 14q3 15q1 15q3 16q1 16q3 17q1 17q4

90% 60% 30% central path

GDP projection – July 2015

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