Inflation, Unemployment, & Stabilization Policies 20-30% of AP Exam
Inflation and economic growth projection of Narodowy Bank ... · Jan.20 Feb.20 Mar.20 Apr.20 May.20...
Transcript of Inflation and economic growth projection of Narodowy Bank ... · Jan.20 Feb.20 Mar.20 Apr.20 May.20...
Economic Analysis Department
Warsaw / 17th July 2020
Inflation and economic growth projection
of Narodowy Bank Polski
based on the NECMOD model
Outline:
Inflation and economic growth projection of the NBP
Epidemic vs economy
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Foreign trade
▪ Labour market
▪ Consumption demand
▪ Investment demand
▪ GDP
▪ Inflation
Uncertainty
2
1 Epidemic vs economy
2 Projection 2020 - 2022
3 Uncertainty
Outline
Outline:
Inflation and economic growth projection of the NBP
Epidemic vs economy
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Foreign trade
▪ Labour market
▪ Consumption demand
▪ Investment demand
▪ GDP
▪ Inflation
Uncertainty
3
Epidemic vs economy
Inflation and economic growth projection of the NBP
Epidemic results in the profound slowdown in economic activity.
4
Source: GUS, Polskie Sieci Elektroenergetycze data, Instytut Meteorologii i Gospodarki Wodnej, meteomodel.pl, Google LLC, StalExport Autostrady S.A, NBP calculations.
Change in annual electric energy consumption* (Monday – Friday, 8-16 o’clock, %)
-16-14-12-10-8-6-4-20
Feb
.20
Mar
.20
Apr
.20
May
.20
Jun.
20
30 M
ar-0
3 A
pr
06 A
pr-1
0 A
pr
13 A
pr-1
7 A
pr
20 A
pr-2
4 A
pr
27 A
pr-0
1 M
ay
04 M
ay-0
8 M
ay
11 M
ay-1
5 M
ay
18 M
ay-2
2 M
ay
25 M
ay-2
9 M
ay
01 J
un-0
5 Ju
n
08 J
un-1
2 Ju
n
15 J
un-1
9 Ju
n
22 J
un-2
6 Ju
n
29 J
un-0
3 Ju
l
* Data corrected for meteorological and callendar effects
Change in population traffic relative to typical values in selected locations
(moving average)
-80
-60
-40
-20
0
20
40
60
80
15 F
eb
22 F
eb
29 F
eb
07 M
ar
14 M
ar
21 M
ar
28 M
ar
04 A
pr
11 A
pr
18 A
pr
25 A
pr
02 M
ay
09 M
ay
16 M
ay
23 M
ay
30 M
ay
06 J
un
13 J
un
20 J
un
27 J
un
Trade and entertainment (shopping centers, restaurants, cinemas)
Grocery stores and pharmacies
-80
-60
-40
-20
0
20
03 F
eb-0
9 F
eb
10 F
eb-1
6 F
eb
17 F
eb-2
3 F
eb
24 F
eb-0
1 M
ar
02 M
ar-0
8 M
ar
09 M
ar-1
5 M
ar
16 M
ar-2
2 M
ar
23 M
ar-2
9 M
ar
30 M
ar-0
5 A
pr
06 A
pr-1
2 A
pr
13 A
pr-1
9 A
pr
20 A
pr-2
6 A
pr
27 A
pr-0
3 M
ay
04 M
ay-1
0 M
ay
11 M
ay-1
7 M
ay
18 M
ay-2
4 M
ay
25 M
ay-3
1 M
ay
01 J
un-0
7 Ju
n
08 J
un-1
4 Ju
n
15 J
un-2
1 Ju
n
22 J
un-2
8 Ju
n
29 J
un-0
5 Ju
l
cars trucks
Change in vehicle traffic on A4 highway Katowice – Kraków (%, y/y) Total retail sale and a sector with the deepest fall (constant prices, y/y)
-80
-60
-40
-20
0
20
40
60
80
-80
-60
-40
-20
0
20
40
60
80
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
total textiles, clothing
Inflation and economic growth projection of the NBP
Substantial fall in foreign demand and supply network disruptions.
5
Source: OECD, Univercity of Oxford, GUS, IHS Markit, NBP calculations.
GDP growth in 2020Q1 (%, q/q, Y axis) vs average OSI level
Industrial production
-30%-25%-20%-15%-10%-5%0%5%10%15%
90
100
110
120
130
140
2017
.06
2017
.08
2017
.10
2017
.12
2018
.02
2018
.04
2018
.06
2018
.08
2018
.10
2018
.12
2019
.02
2019
.04
2019
.06
2019
.08
2019
.10
2019
.12
2020
.02
2020
.04
growth y/y (RHS) index 2015=100 s.a.
Production in export and non-export sectors (01.2014 = 100, s.a.)
90
100
110
120
130
140
150
160
2014 2015 2016 2017 2018 2019 2020
Export Non-export
France
Germany
Italy
Korea
Poland
Slovakia
Spain
Sweden
USA
China
Hong Kong
-12
-10
-8
-6
-4
-2
0
2
0 10 20 30 40 50
30
35
40
45
50
55
Suppliers' Delivery Times Index
Stocks of Purchases Index
PMI components for Poland – suppliers’ delivery times index and stocks of
purchases index
Inflation and economic growth projection of the NBP 6
Economic growth in Poland plummeted in 2020Q2
20q1 20q2*
GDP (y/y) (%)2.0 (2.9) -10.6 (3.0)
Domestic demand (y/y) (%)1.7 (2.9) -11.1 (3.0)
Household consumption (y/y) (%)1.2 (3.7) -12.0 (3.8)
Public consumption (y/y) (%)4.3 (3.5) 7.0 (5.0)
Gross fixed capital form. (y/y) (%)0.9 (4.2) -18.5 (4.3)
Exports (y/y) (%)0.6 (2.9) -22.3 (4.4)
Imports (y/y) (%)-0.2 (2.8) -24.5 (4.4)
Net exports contribution (pp.)0.4 (0.1) 0.0 (0.1)
Values from the March projection are given in brackets (seasonally adjusted).
Indicators with values higher than in the March projection are marked green, and indicators with lower values are
marked red.
Source: GUS data, NBP calculations.
30
35
40
45
50
55
60
-80
-70
-60
-50
-40
-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)
-16
-12
-8
-4
0
4
8
12
-16
-12
-8
-4
0
4
8
12
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Industrial and constr. production y/y * Retail sales y/y *
Real wage fund in corporate sector y/y * GDP y/y *
* Nowcasting for 2020Q2
* Forecast for 2020Q2
Outline:
Inflation and economic growth projection of the NBP
Epidemic vs economy
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Foreign trade
▪ Labour market
▪ Consumption demand
▪ Investment demand
▪ GDP
▪ Inflation
Uncertainty
7
Projection 2020-2022
Inflation and economic growth projection of the NBP
Assumptions
■ Lack of explicit second wave of epidemic in Europe, although possible temporary
increases in the numer of newly infected.
■ Gradual lifting of restrictions – however part of them will be maintained untill the
widespread use of vaccine / effective medical treatment.
■ Sustained uncertainty and an increase in marginal propensity to save due to
precautionary motive.
■ Gradual phasing out of fiscal programs in 2020Q3.
8
Outline:
Inflation and economic growth projection of the NBP
Epidemic vs economy
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Foreign trade
▪ Labour market
▪ Consumption demand
▪ Investment demand
▪ GDP
▪ Inflation
Uncertainty
9
Projection 2020-2022
Economic conditions abroad
Inflation and economic growth projection of the NBP 10
After marked slowdown in 1st half of 2020, slow rebound in the global economic activity.
Source: Bloomberg, IHS Markit, OECD, NBP calculations.
GDP in the global economy (%, q/q, sa)
GDP y/y, % 2020 2021 2022
Euro area -9.1 5.2 3.2
Germany -6.7 5.4 3.0
Great Britain -9.6 5.1 3.3
USA -5.7 3.4 2.7
China 1.1 7.0 5.0
GDP forecast in selected economies
Factors affecting the forecast:
Stabilisation of epidemic situation in Europe and gradual lifting of
restrictions.
Monetary and fiscal loosening worldwide.
High uncertainty related to the future pandemic development and
economic outlook
Weak outlook for emerging markets.
Brexit
PMI Manufacturing in selected economies
-5
-4
-3
-2
-1
1
2
3
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
World Developed economies Emerging economies
20
30
40
50
60
US
Eur
o ar
ea
Japa
n
Gre
at B
ritai
n
Chi
na
Indi
a
Bra
zil
Jan.20 Feb.20 Mar.20 Apr.20 May.20 Jun/20
Inflation and economic growth projection of the NBP 11
Source: Eurostat, Google Mobility Reports, Ministry of Labour – France and Germany, NBP calculations.
Index of mobility in sale and recreation
Anti-crises measures in euro area countires (% of GDP)
Decomposition of changes in GDP in euro area (% and p.p.)
GDP dynamics in EA countries in 2020Q1 (% q/q)
Euro area: high disparity in economic consequences of pandemic in EA countires.
-6
-5
-4
-3
-2
-1
0
0
10
20
30
40
50
Direct measures Indirect measures
-100
-80
-60
-40
-20
0
20
7 Mar 21 Mar 4 Apr 18 Apr 2 May 16 May 30 May 13 Jun 27 Jun
France Italy Germany Spain
-15
-10
-5
0
5
10
2020 F 2021 F 2022 F
GFCF Individual consumption
Collective consumption Net export
Changes in inventories GDP
Inflation and economic growth projection of the NBP 12
United States: gradual rebound in economic growth and marked support from fiscal and monetary policy.
Source: BAE, BLS, Homebase, OpenTable, Transportation Security Administration, NBP calculations.
Changes in non-agricultural employment (mln of workplaces, y/y sa)
Disposible income in US (USD, per capita)
Indexes of economic conditions for US economy (points, sa)
Decomposition of average annual real GDP growth (%)
30
35
40
45
50
55
60
65
2007 2011 2015 2019
Manufacturing Services
-25
-20
-15
-10
-5
0
5
-25
-20
-15
-10
-5
0
5
2018 2019 2020
Government sector Services sector
Goods producing sector Non-agricultural sector
-10.0
-5.0
0.0
5.0
2020 F 2021 F 2022 F
Individual consumption Private GFCF Change in inventories
Net exports Collective consumption GDP
0
5
10
15
20
25
30
35
40
0
2
4
6
8
10
12
14
16
2018 2019 2020
Transfers (% of disp.income, RHS) Disposible income (%, y/y, LHS)
Outline:
Inflation and economic growth projection of the NBP
Epidemic vs economy
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Foreign trade
▪ Labour market
▪ Consumption demand
▪ Investment demand
▪ GDP
▪ Inflation
Uncertainty
13
Polish economy
Foreign trade
Inflation and economic growth projection of the NBP
-50
-40
-30
-20
-10
0
10
20
IT RU CZ FR ES GB DE BE NL CN US KR
14
Slump in foreign trade turnover due to COVID-19
Dynamics of exports of goods (y/y, %, April 2020)
Dynamics of imports of goods (y/y, %, April 2020)
Dynamics of imports and exports to main trading partners, April 2020
Exports’ dynamics by manufacturing sectors, April 2020
Source: GUS, WIOD, NBP calculations.
NOLT
TR
DK
RO
UAATHU
SK SE
BEES
US
GB
CN
NL
RUCZFR
IT
DE
-50
-40
-30
-20
-10
0
10
-60 -50 -40 -30 -20 -10 0 10
Import
dynam
ics, y/y
, %
Exports dynamics, y/y, %
*the marker size corresponds to the share in the Polish foreign trade-60
-50
-40
-30
-20
-10
0
IT ES FR SK HU CZ GB NL DE RU SE US
-80
-60
-40
-20
0
20
40investment and durable consumer goods other goods
Inflation and economic growth projection of the NBP 15
-4
-3
-2
-1
0
1
2
3
4
5
6
7
8
55
60
65
70
75
80
85
90
95
100
105
110
115
13q1 14q1 15q1 16q1 17q1 18q1 19q1 20q1 21q1 22q122q4
Net exports contribution (p.p., RHS)
Exports (index: Q4 2019 = 100, sa, left axis)
Imports (index: Q4 2019 = 100, sa, left axis)
Downturn in exports and imports, sustained decrease in trade dynamics.
y/y pp. 2019 2020 2021 2022
Net exports
contribution to growth1.2 0.4 0.3 -0.1
Net exports’ contribution to GDP growth
-6
-4
-2
0
2
4
6
8
10
-6
-4
-2
0
2
4
6
8
10
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.
Outline:
Inflation and economic growth projection of the NBP
Epidemic vs economy
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Foreign trade
▪ Labour market
▪ Consumption demand
▪ Investment demand
▪ GDP
▪ Inflation
Uncertainty
16
Labour market
Inflation and economic growth projection of the NBP 17
The government has undertaken extensive anti-crisis measures financed with domestic funds
and EU funds
Impact of anti-crises measures on the GG balance (ESA 2010) in
2020 (bn PLN)EU funds absorption under cohesion policy,
highliting amounts allocated for anti-crisis measures (bn PLN)
Source: ZUS, MRPiPS, MR, PFR, GUS, MFiPR, NBP calculations.
We assumed total cost of direct support which bear an
impact on GG balance in 2020 to equel 115 bn PLN
Additional 12,1 bn zł financed with EU funds (thus not
changing GG balance in ESA 2010 terms)
F – NBP forecast
0 10 20 30 40 50 60
Other(incl. healthcare system, tourist
voucher)
Work suspension benefits
Loans to micro-enterprises (5000 PLN)
Wage subsidies
Child care allowance
Exemption from social securitycontributions
Loans from the Polish DevelopmentFund
(the non-repayable component)
0.000
10.000
20.000
30.000
40.000
50.000
60.000
70.000
data
data
data
data
Ma
rch
data
Ma
rch
July
Ma
rch
July
Ma
rch
July
2015 2016 2017 2018 2019 2020F 2021F 2022F
anti-crisis measures
Inflation and economic growth projection of the NBP 18
Source: GUS data, NBP calculations.
Negative impact of epidemic on the labour market, partly adjusted by reducing working time.
Vacancies and a share of surveyed companies reporting difficulties in
finding new employees as a barrier for expansion
Employment dynamics’ decomposition in enterprise sector y/y
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
05.2017 05.2018 05.2019 05.2020
Mining Manufacturing
Construction Market services
Energetics + water supply Other
average employment
Wages growth contribution by enterprise sectors (y/y, p.p.)
-2%
0%
2%
4%
6%
8%
10%
05.2017 09.2017 01.2018 05.2018 09.2018 01.2019 05.2019 09.2019 01.2020 05.2020
Manufacturing Construction
Market services Energetics and water supply
Others Mining
Average employment and the numer of employees in enterprise sector y/y
-4%
-3%
-2%
-1%
0%
1%
2%
3%
4%
5%
05.2017 05.2018 05.2019 05.2020
Average employment Number of employees
0
20
40
60
0
50
100
150
200
250
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
Tho
usan
ds
Number of vacancies within a month, s.a. LHS
Number of non-subsidised vacancies within a month, s.a., LHS
Scarce human resources, RHS
Inflation and economic growth projection of the NBP
0%
2%
4%
6%
8%
10%
12%
14%
16%
2013 2014 2015 2016 2017 2018 2019 2020 2021 2022
LFS unemployment rate
LFS unemployment rate forecast
Registered unemployment rate
6,1%
19
Source: GoogleTrends, average data, NBP calculations
Only a limited increase in unemployment rate.
Decomposition of changes in number of unemployed people registered in labour
offices (thous.)Registered and LFS unemployment rate (s.a.)
Interest in unemployment benefit based on internet data (index, max = 100)
55
56
57
-6
-5
-4
-3
-2
-1
0
1
2
3
4
13q1 14q1 15q1 16q1 17q1 18q1 19q1 20q1 21q1 22q1 22q4
Employment (y/y, %) Participation rate (%, RHS)
Employment and participation rate forecast
0
20
40
60
80
100
01.2018 05.2018 09.2018 01.2019 05.2019 09.2019 01.2020 05.2020
Intensity of searching a phrase "unemployment benefit" Trend
-200
-150
-100
-50
0
50
100
150
200
250
01.2018 05.2018 09.2018 01.2019 05.2019 09.2019 01.2020 05.2020
Unregistered due to employment Unregistered due to other cause Newly registered
Inflation and economic growth projection of the NBP 20
Labour market adjustments curbed by Anti-crises Shield.
Share of enterprises anticipating employment reduction in the coming 3 months
(business tendency GUS)
Number of employees supported by work suspansion benefits, wage subsidies related
to reduced working time and economic lockdown
(mln, as of 19.06.2020)
Source: Ministry of Development, GUS
-70
-50
-30
-10
10
30
2005 2007 2009 2011 2013 2015 2017 2019
Non-trade services wholesale trade retail trade
manufacturing construction
Number of employees supported by Anti-crises Shield (cumulative, mln;
as of 19.06.2020)
00.20.40.60.8
11.21.41.61.8
work suspension benefitsfor self-employed and persons
employed under a civil-lawcontracts
wage subsidies - EuropeanSocial Fund
wage subsidies - GuaranteedEmployment Benefit Fund
0.0
0.5
1.0
1.5
2.0
2.5
3.0
3.5
8 May 15 May 22 May 29 May 5 Jun 12 Jun 19 Jun
economic lockdown reduced working time work suspension benefits
Changes in average employment and numer of employees in the enterprise
sector by sections (Mar-May 2020, thous.)
* As of 10.06.2020
-120
-100
-80
-60
-40
-20
0
Employed as of the end of month Average monthly employment
Inflation and economic growth projection of the NBP 21
Coronavirus pandemic contributes to lower effective labour supply, including decreasing
numer of imigrants.
Source: GUS, ZUS.
Passanger border traffic of foreigners on Polish borders (thous.)
LFS participation rate (y/y)People employed but not working in the week in question as the share
of the total numer of employed (%)
19.0%
8.1%6.6%
1.3%
4.6%
0.9%
0%
5%
10%
15%
20%
2020Q1 - last 2 weeks 2020Q1 - total
Total
Due to the break in company's activity
For "other reasons" (including childcare)
Crossing the border, thousands.: Balance of border
traffic, thous.to Poland from Poland
Foreigners (total) 714.8 938.0 -223.2
including citizens from:
Ukraine 407.8 567.8 -160.0
Belarus 162.7 196.7 -34.0
Russia 41.8 51.3 -9.5
Moldavia 2.6 5.2 -2.5
-2.0%
-1.5%
-1.0%
-0.5%
0.0%
0.5%
1.0%
1.5%
2.0%
12q1 12q3 13q1 13q3 14q1 14q3 15q1 15q3 16q1 16q3 17q1 17q3 18q1 18q3 19q1 19q3 20q1
15-24 25-34 35-44 45-60/65 60/65+ Active people (LFS)
Estimated change in the numer of foreigners working in Poland (thous.)
178 196 281379
568
792891
1 001 920 904 899
7 54
6
21
5164
7469 70 71
62 6673
79
88
102
121
136130 129 133
0
500
1000
1500
2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022T
hous
ands Effective no. of foreign workers excl. UA and BY
Effective no. of Balarusian workers in Poland
Effective no. of Ukrainian workers in Poland
Effective no. of foreign workers in Poland
Inflation and economic growth projection of the NBP 22
Source: GUS, NBP calculations.
Falling employment in the enterprise sector in April 2020 along with a slump in wages dynamics.
Annual wage growth (%, raw monthly data, data for National Economy till 2020Q1
and for enterprise sector till May 2020)
-12
-8
-4
0
4
8
12
16
-12
-8
-4
0
4
8
12
16
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, %)
Employment and participation rate forecast (y/y, %)Dynamics of wages and labour productivity in industry (y/y, %, monthly data
till May 2020)
1.2%
0%
2%
4%
6%
8%
10%
2010 2012 2014 2016 2018 2020
Nominal wages in National Economy y/y
Nominal wages in enterprise sector y/y
-0.3%
-10.6%
-20%
-15%
-10%
-5%
0%
5%
10%
15%
20%
2010 2012 2014 2016 2018 2020
Wages in industry y/y s.a. Labour productivity in industry y/y s.a.
20q1 20q2*
Gross wages (y/y, %) 7.7 (7.3) 1.2 (7.0)
Real wages (y/y, %) 3.0 (2.8) -2.0 (3.3)
Employment LFS (y/y, %) 0.9 (0.1) -1.9 (0.1)
ULC (y/y, %) 6.6 (4.5) 10.9 (4.1)
Labour productivity (y/y,%) 1.1 (2.8) -8.8 (2.9)
Unemployment rate LFS (%) 3.0 (3.0) 4.9 (3.0)
Participation rate (%) 56.2 (56.1) 55.8 (56.1)
Values from the March projection are given in brackets. Indicators with values higher than in the March
projection are marked green, and indicators with lower values are marked red.
* Forecast for 2020Q2
Outline:
Inflation and economic growth projection of the NBP
Epidemic vs economy
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Foreign trade
▪ Labour market
▪ Consumption demand
▪ Investment demand
▪ GDP
▪ Inflation
Uncertainty
23
Consumption demand
Inflation and economic growth projection of the NBP 24
Deterioration of financial situation of households. Increased fear of being unemployed.
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 householdsfinancial situation of households in the next 12 monthsfear of being unemployed
-60
-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
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
-10
-8
-6
-4
-2
0
2
4
6
8
10
12
14
19q1 20q1 21q1 22q1 22q4
Operating surplus Property income
Wage fund 500 plus
Net transfers and taxes excl. 500 plus Disposable income (y/y, %)
Decomposition of disposible income (constant prices) (y/y, %)
Source: GUS data, NBP calculations.
Inflation and economic growth projection of the NBP 25
Household consumption :
Heightened uncertainty – rising savings rate.
After initial slump in employment and wages, in the longer projection
horizon only a limited improvement in labour market situation is
foreseen.
Change in the behaviour of the population due to fear of being
infected by COVID-19.
Anti-crisis Shield.
Expansive monetary policy – reducing reference rate to 0.1 p.p. and
asset purchase programme run by NBP.
Public consumption :
In 2020 increase in expenditure for healh care.
Neutral fiscal policy assumed in the longer projection horizon.
Consumption demand will gradually increase, however it will reach the level of 2019Q4 only in
the 2nd half of 2021.
y/y, % 2019 2020 2021 2022
Household
consumption3.9 -4.2 5.3 2.4
Public consumption 4.9 5.5 3.1 3.4
75
80
85
90
95
100
105
110
115
75
80
85
90
95
100
105
110
115
13q1 14q1 15q1 16q1 17q1 18q1 19q1 20q1 21q1 22q122q4
Household consumption (index: Q4 2019 = 100, sa)
Public consumption (index: Q4 2019 = 100, sa)
Consumption forecast
Source: GUS data, NBP calculations.
Outline:
Inflation and economic growth projection of the NBP
Epidemic vs economy
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Foreign trade
▪ Labour market
▪ Consumption demand
▪ Investment demand
▪ GDP
▪ Inflation
Uncertainty
26
Investment demand
Inflation and economic growth projection of the NBP 27
The scale of cutting planned investment higher than in 2009.
Source: GUS, NBP.
Expected change in investment spending
(balance of changes, p.p.)
Cutting current investment (companies cutting investment as the
share of investors, %)
Expected change in investment spending and export activity
(balance of changes, p.p., s.a.)
0
5
10
15
20
25
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
-25
-15
-5
5
15
2014 2015 2016 2017 2018 2019 2020
quarterly - no exports quarterly - exporter
annual - no exports annual - exporter
-20
-15
-10
-5
0
5
10
15
-20
-15
-10
-5
0
5
10
15
2012 2013 2014 2015 2016 2017 2018 2019 2020
annual plans quarterly plans
Investment optimism index OPTIN and investment dynamics (F01)
-10
-8
-6
-4
-2
0
2
4
6
-30
-20
-10
0
10
20
30
03.2
012
08.2
012
01.2
013
06.2
013
11.2
013
04.2
014
09.2
014
02.2
015
07.2
015
12.2
015
05.2
016
10.2
016
03.2
017
08.2
017
01.2
018
06.2
018
11.2
018
04.2
019
09.2
019
02.2
020
07.2
020
Investment (c.p., y/y, F-01)
OPTIN (y/y, s.a., RHS)
Inflation and economic growth projection of the NBP 28
Investment spending of local government units (y/y, %)Contributions to public investment growth (current prices, y/y, %)
Source: GUS, Eurostat, Ministry of Finance, NBP calculations. All data presented in nominal terms.
F – NBP forecast
In 2020 expected increase in public investment dynamics after its slowdown in 2019.
-30
-20
-10
0
10
20
30
40
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0 F
202
1 F
202
2 F
local governments other total
-60
-40
-20
0
20
40
60
80
100
200
8
200
9
201
0
201
1
201
2
201
3
201
4
201
5
201
6
201
7
201
8
201
9
202
0
election year
post-election year
Inflation and economic growth projection of the NBP 29
Private investment :
High uncertainty lowering economic agents’ propensity for long-term
commitment.
Unfavourable financial situation of large share of agents.
Low domestic and foreign demand.
Expansive monetary policy – reducing reference rate to 0.1 p.p. and
asset purchase programme run by NBP.
Public investment :
In 2020 increase in public investment related in particular to planned
construction of highways and railway, as well as government anti-
crisis measures.
Marked decrease in EU funds absorption in 2022.
Sustained drop in investment rate due to heightened uncertainty and only a slight rebound in
demand.
y/y, % 2019 2020 2021 2022
Gross fixed capital formation 7.2 -13.5 -2.0 7.9
-30
-25
-20
-15
-10
-5
0
5
10
15
20
-30
-25
-20
-15
-10
-5
0
5
10
15
20
19q4 20q1 21q1 22q1 22q4
GFCF public sector GFCF private sector GFCF
Changes in the level of investment and its decomposition
(%, reference period 2019Q4)
Source: GUS data, NBP calculations.
Outline:
Inflation and economic growth projection of the NBP
Epidemic vs economy
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Foreign trade
▪ Labour market
▪ Consumption demand
▪ Investment demand
▪ GDP
▪ Inflation
Uncertainty
30
Gross Domestic Product
Inflation and economic growth projection of the NBP 31
Only a limited rebound in economic activity in the quarters to come.
Private consumption will grow gradually, however due to the
increase in uncertainty, worse labour market situation and
changes in the consumers’ preferences, the level of 2019Q4
will be reached only in the 2nd half of 2021.
Sustained drop in investment rate due to highten uncertainty,
unfavourable financial situation of companies and decrease in
EU funds absorption in 2022 to the level close to that of 2019
(in 2020-21 increase in capital transfers).
Sustained lowering of exports’ dynamics (disruptions in
global value chains, slowdown or reversal of the globalisation
process).
Anti-crisis measures run by government and Narodowy Bank
Polski.
y/y, % 2019 2020 2021 2022
GDP 4.1 -5.4 4.9 3.7
-15
-12
-9
-6
-3
0
3
6
9
-15
-12
-9
-6
-3
0
3
6
9
19q4 20q1 21q1 22q1 22q4
Private consumption Public consumption
Gross capital formation Net exports
GDP
Changes in GDP level and its decomposition
(%, reference period 2019Q4)
Source: GUS data, NBP calculations.
Outline:
Inflation and economic growth projection of the NBP
Epidemic vs economy
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Foreign trade
▪ Labour market
▪ Consumption demand
▪ Investment demand
▪ GDP
▪ Inflation
Uncertainty
32
Inflation
Inflation and economic growth projection of the NBP 33
In 2020Q2 a drop in inflation due to lower food and energy prices dynamics while core inflation is
rising.
Source: GUS data, NBP.
CPI and core inflation (y/y, % monthly data)
3.3
4.1
-2
0
2
4
6
2013 2014 2015 2016 2017 2018 2019 2020
CPI Inflation target Core inflation
y/y, % 20q1 20q2*
CPI inflation 4.5 (4.3) 3.2 (3.6)
Core inflation 3.4 (3.3) 3.7 (3.4)
Food prices 7.7 (7.1) 6.4 (5.2)
Energy prices 3.6 (3.6) -4.3 (2.0)
CPI decomposition (p.p., y/y)
-3
-2
-1
0
1
2
3
4
5
2015 2016 2017 2018 2019 2020
Energy
Fuel
Services
Goods
Food and non-alcoholic beverages
CPI
Drop in fuel prices (slump in the global oil prices)
* NBP calculations based on GUS flash estimate for June 2020.
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.
-19.3
-25
-20
-15
-10
-5
0
5
10
15
Jan-
19
Feb
-19
Mar
-19
Apr
-19
May
-19
Jun-
19
Jul-1
9
Aug
-19
Sep
-19
Oct
-19
Nov
-19
Dec
-19
Jan-
20
Feb
-20
Mar
-20
Apr
-20
May
-20
Jun-
20
m/m y/ydynamics
Inflation and economic growth projection of the NBP 34
Core inflation (%, y/y)
Core inflation decomposition – data till May 2020 (y/y, p.p.) Increase in medical services prices in May 2020 (mainly dental,
hospitals and sanatoriums)
Increase in financial services prices in May 2020 (provided by
banks – higher fees for using personal account)
In 2020Q2, the increase in core inflation driven by rising prices of services, mainly market services (including
so-called COVID fee)
Source: NBP, GUS, NBP calculations.
-2
-1
0
1
2
3
4
2015 2016 2017 2018 2019 2020
Excise goods Non-food goods
Administered services Market services
Core inflation
39.3
-20
-10
0
10
20
30
40
50
Jan-
19
Feb
-19
Mar
-19
Apr
-19
May
-19
Jun-
19
Jul-1
9
Aug
-19
Sep
-19
Oct
-19
Nov
-19
Dec
-19
Jan-
20
Feb
-20
Mar
-20
Apr
-20
May
-20
m/m y/y
9.4
-2
0
2
4
6
8
10
Jan-
19
Feb
-19
Mar
-19
Apr
-19
May
-19
Jun-
19
Jul-1
9
Aug
-19
Sep
-19
Oct
-19
Nov
-19
Dec
-19
Jan-
20
Feb
-20
Mar
-20
Apr
-20
May
-20
m/m y/y
-2
0
2
4
6
8
2015 2016 2017 2018 2019 2020
Core inflation Services Goods
34
Inflation and economic growth projection of the NBP 35
Low demand pressure and moderate cost pressure in the projection horizon.
-12
-9
-6
-3
0
3
6
9
12
70
75
80
85
90
95
100
105
110
13q1 14q1 15q1 16q1 17q1 18q1 19q1 20q1 21q1 22q122q4
Output gap (% potential output)
GDP (index: Q4 2019 = 100, sa, left axis)
Potential output (index: Q4 2019 = 100, sa, left axis)
Source: GUS data, NBP calculations.
-2
-1
0
1
2
3
4
5
6
-2
-1
0
1
2
3
4
5
6
TFP Capital
NAWRU Economically active pop.
Potential output (y/y, %)
-12
-8
-4
0
4
8
12
16
-12
-8
-4
0
4
8
12
16
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
y/y, %Import prices excl. oil and gas prices (y/y, %)Import prices (y/y, %)
Inflation and economic growth projection of the NBP 36
Source: Datastream, OECD, NBP calculations.
Inflation worldwide (%, y/y) Core inflation in selected economies (%, y/y)
Brent and WTI oil prices (USD/b) VA deflator in US and euro area (%, y/y)
Demand shock related to COVID-19 pandemics markedly curb global inflation
0
1
2
3
4
5
6
2012 2014 2016 2018 2020
Global economy Developed economies Emerging economies
-2
-1
0
1
2
3
2012 2014 2016 2018 2020
Japan Euro area Great Britain United States
-60
-40
-20
0
20
40
60
80
01.2020 02.2020 03.2020 04.2020 05.2020 06.2020
Brent WTI
0.0
0.5
1.0
1.5
2.0
United States Euro area Germany
2019 2020 F 2021 F 2022 F
Inflation and economic growth projection of the NBP 37
Low prices of energy commodities due to weak global demand.
Global oil production, consumption and change in stocks (milion b/d)
Market crude oil inventories in the US (mln b/d)
Energy commodities’ prices index (USD, 2011=1) and crude oil prices
(USD/b) in the projection
Changes in consumption of crude oil and liquid fuels worldwide (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 index (LHS) Brent oil (RHS)
-5
0
5
10
80
85
90
95
100
105
110
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)
-4
-3
-2
-1
0
1
2
2018 2019 2020 2021
China USA India Middle East Other OECD Non-OECD
300
400
500
600
2015 2016 2017 2018 2019 2020 2021
Source: data - GUS, Bloomberg, Reuters, EIA, NBP calculations.
Inflation and economic growth projection of the NBP 38
Lowest CPI dynamics in 2021, in 2022 gradual growth of inflation, however lower than 2.5%.
Increase in excise duty in January 2020.
Temporary upturn in food prices inflation in the short projection
horizon due to supply constraints.
Low level of energy commodities’ prices on the global markets.
In the short-term horizon increase in costs of enterprises related to
economic restrictions.
Disruptions in global supply chains.
Dwindling demand in the middle-term horizon and its gradual
rebound in the subsequent years.
Low inflation in our main trading partners’ economies, limited
increase in 2022.
In 2021 drop in unit labour costs, moderate increase afterwards.
y/y, % 2019 2020 2021 2022
CPI inflation 2.3 3.3 1.5 2.1
-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.
Outline:
Inflation and economic growth projection of the NBP
Epidemic vs economy
Projection 2020 – 2022
▪ Economic condtions
abroad
▪ Foreign trade
▪ Labour market
▪ Consumption demand
▪ Investment demand
▪ GDP
▪ Inflation
Uncertainty
39
Uncertainty
▪ Risk factors
▪ Fan charts
Risk area Description ImpactScale of
impact
More severe
course of the
pandemic
▪ Poland and other countries easing restrictions run the risk of the second wave of infections and the return of some
of the administrative restrictions, in other parts of the world where the numer of active cases is still increasing (e.g.
India, South America) further strong growth in the numer of newly infected.
▪ Disruptions in the global value chains.
▪ Permanent change in economic behaviour of the population (the principle of increased social distancing) – drop in
demand for some services.
▪ High uncertainty and pessimistic business sentiment – increased financial market tensions and investment
reduction.
▪ Slowdown or reversal of the globalisation process, intensification of trade disputes between the United States, the
European Union and China.
▪ Intensification of fiscal problems in the euro area countries most affected by the crisis.
▪ In consequence sustained loss of potential output (reduction in corporate investment, increase in equilibrium
unemployment rate, lower participation rate, slower growth of total factor productivity).
Inflation
GDP **
Milder course of
the pandemic
▪ In Poland and abroad no second wave of infections, discovery of effective medical treatment, faster lifting of
restrictions.
▪ Increase in optimism of economic agents, the behaviour of households and enterprises would return to a state
similar to that before the pandemic.
▪ Improvement of the global sentiment (gradual easing of tensions in world trade and an increase in international
trade volume).
▪ Possible introduction of the EU new stimulus package, the so-called Next Generation EU.
▪ Only temporary fall of potential output.
Inflation
GDP *
Prices of energy
and agricultural
commodities
▪ Volatily of the global prices of energy commodities due to changes in demand and actions taken by the major
producers.
▪ Risk of a significant deviation of meteorological conditions compared to the long-term average in countries that are
important food producers and in Poland.
Inflation
GDP *
Summary Inflation GDP
Inflation and economic growth projection of the NBP 41
GDP
y/y, %
central
path
50% probability
interval
2020 -5.4 -7.2 -4.2
2021 4.9 2.1 6.6
2022 3.7 1.9 6.0
CPI
y/y, %
below
1.5%
below
2.5%
below
3.5%
below
centr.
path
within
1.5-3.5%
range
2020 0% 7% 71% 55% 71%
2021 65% 90% 99% 66% 34%
2022 50% 73% 91% 63% 41%
CPI
y/y, %
central
path
50% probability
interval
2020 3.3 2.9 3.6
2021 1.5 0.3 2.2
2022 2.1 0.6 2.9
CPI inflation (y/y, %) GDP level (2019Q4 = 100)
-4
-3
-2
-1
0
1
2
3
4
5
6
7
-4
-3
-2
-1
0
1
2
3
4
5
6
7
17q1 18q1 19q1 20q1 21q1 22q1 22q4
90% 60% 30% central path inflation target
80
85
90
95
100
105
110
115
80
85
90
95
100
105
110
115
19q4 20q2 20q4 21q2 21q4 22q2 22q4
90% 60% 30% central path
Source: GUS data, NBP calculations.