A bright future for the Polish economy and the Polish stock exchange?

The year 2023 brought many challenges for the Polish economy, with high inflation and low economic growth at the forefront. Now, analyzing the forecasts International Monetary Fund (IMF) for 2024 and 2025, it is worth considering what conclusions can be drawn about GDP growth and inflation in Poland and what the potential effects will be on the stock market.

GDP growth – positive prospects

IMF forecasts suggest that Poland can expect improved GDP growth in 2024 and 2025. After the economic slowdown in 2023, where the indicator may amount to only 0,5%, a significant acceleration is expected. In 2024, growth is expected to be 2,3%, and in 2025 this growth is expected to be even higher and amount to 3,4%. This means that the Polish economy is returning to the growth path, which can bring benefits to both enterprises and consumers.

GDP growth is a key factor influencing the results of listed companies. Overall economic health improves, which usually leads to better financial performance for companies. GDP growth may suggest increased production, greater consumption and investment. Therefore, it can be expected that the company's results will also increase.

Inflation – a decreasing trend

The highest level of inflation occurred in 2023, reaching almost 20% at the peak. However, IMF forecasts predict a gradual decline in inflation in the coming years. In 2024, it is forecast to amount to an annual average of 6,4%, and in 2025 it will drop even lower, reaching the level of 4,5%. Falling inflation is good news for consumers and businesses.

A decline in inflation may also impact monetary policy National Bank of Poland (NBP). As inflation declines, the National Bank of Poland has greater freedom in adjusting interest rates. In practice, this means that as inflation declines, further reductions in interest rates can be expected, which may be beneficial for the economy and borrowers.

Impact on share valuations on the stock exchange

As inflation declines, the NBP can be expected to reduce interest rates. A fall in interest rates usually leads to an increase in share prices on the stock market, as investors often redirect their funds from safe assets to the stock market in search of higher potential rates of return.

Moreover, growth CBA may suggest that companies will have better financial results, which may also affect share valuations. Economic growth usually means greater demand for companies' products and services, which leads to increased profits. As a result of improving company results and falling interest rates, the popular P/E multiplier should also increase.

Conclusions:

• Poland can expect improved GDP growth in 2024 and 2025,
• Falling inflation may result in lower interest rates by the National Bank of Poland and a greater standard of living,
• Expected economic growth and lower inflation may benefit the stock market.

To sum up, IMF forecasts suggest that Poland is going through a period of slowdown, but it seems that better times are coming. Stock market investors and borrowers can expect favorable changes in the coming years. However, it is worth remembering that these forecasts are subject to change and the economic situation may change depending on many factors.