Polish investors are pessimistic about the economic outlook

From the latest Individual Investor's Pulse, published by eToro platformshows that 66% of investors see inflation as the greatest domestic risk, compared with just 55% in July, while 32% believe that international conflicts are the main external threat to their investments. This represents a significant increase from 19% in September. Behind these concerns are doubts about the Polish economy (40%) and tax increases (31%).

Investors' confidence in the future of the Polish economy is declining

Currently, only 31% of Polish respondents are convinced of its prospects, compared to 40% at the end of September. Surprisingly, 86% are confident in their employment, 77% in their own investments, and 71% in their income and living standards (down from 80% in Q53 and Q38). More than half (28%) are certain of the prospects for the Polish real estate market. At the same time, as much as XNUMX% (compared to XNUMX% in the third quarter) expect that the Polish economy will deteriorate significantly in the next 12 monthsand a further 37% expect it to be "slightly worse". Interestingly, over the next year, 23% of respondents believe in the global economy.

As in September, 51% of Polish individual investors are repositioning their portfolios, which suggests that they are adapting their own strategy to changing expectations and the environment.

Inflation, interest rates and the "Polish Deal"

It is not surprising that Poland is a country where investors are particularly concerned about inflation. This is mainly due to its record level, which amounted to 8,6% in December, and will probably be even higher in the following months. Inflation also results in interest rate increases predicted by investors. Interestingly, the MPC started to raise rates only in October 2021, i.e. with a delay in relation to other central banks in Central Europe.

When the first rate hike took place, it turned out that it was not only predicted by the market, but even expected. When we compared the reaction of capital markets to the first rate hike in a given country - we examined the situation in 20 countries where the first rate hike took place - it turned out that the hike in Poland produced the most positive market reaction, and Polish stocks two weeks before and two weeks after the hike , increased by over 5%. Since October, the MPC has been raising rates regularly at each meeting, most recently by 50 bp, on January 4 this year. Stock market investors remain calm, and increases do not hinder very good results of Polish indices.

It is also worth noting that 31% of Polish investors expressed concerns about the increase in tax burdens in Poland. This is clearly the effect of the introduction Of the "Polish Deal". However, when the study was conducted, it was still a project. The first serious problems with the implementation of these changes appeared after January 1. Therefore, I expect that in the next survey there will be even more people worried about the state of the tax system in Poland.

The survey also showed a significant increase in the percentage of investors who are concerned about international conflicts. During the study, the tension related to the situation on the Polish-Belarusian border continued, which resulted in the introduction of a state of emergency. It was also starting voltage on the Russia-Ukraine linewhich has increased since then. Many investors ignore geopolitical risk in their current decisions, but it seems that every investor should take them into account.

Negative prospects?

Polish investors are still pessimistic about the future of economies. This applies both to the outlook for the Polish economy - 38% believe that its condition will deteriorate in the next 12 months, and to the global economy, although to a lesser extent - 23% of respondents assess its prospects for the coming year negatively. There is a clear discrepancy between the predictions for the economy as a whole and the individual's perception of his own situation. As many as 86% of Polish investors are not afraid of losing their job, 82% are satisfied with their own investments, and 71% are not worried about a decline in income and living standards. So it looks like the current time is very good for investors. And while they fear that the economic outlook will worsen, it does not necessarily translate quickly into their own wallets.

Half of Polish individual investors correctly predicted that National Bank of Poland will start to raise interest rates in the next 3 months (against only 18% in Q22, and another 3% in the next 6-30 months). However, 25% have done nothing in the last three months to prepare for rising interest rates, while 18% have chosen to save more and XNUMX% have invested
in cryptocurrencies.

About the author

Pawel Majtkowski - analyst eToro on the Polish market, which shares its weekly commentary on the latest stock market information. Paweł is a recognized expert on financial markets with extensive experience as an analyst in financial institutions. He is also one of the most cited experts in the field of economy and financial markets in Poland. He graduated from law studies at the University of Warsaw. He is also the author of many publications in the field of investing, personal finance and economy.