The cycle of interest rate increases not to be favorable for investments

In a recently published analysis, BNP Paribas bank forecasts that the dynamics of economic growth in Poland may be lower by about 1 percentage point this year. and will amount to 3.5 percent. However, this forecast is subject to high risk due to the high uncertainty about the economic consequences of the war in Ukraine. If, as a result, activity in the euro area weakens significantly, economic growth in Poland may turn out to be even lower this year. At the same time, rising commodity prices, weaker exchange rates, and disturbances in supply chains will further fuel the already high inflation.

The forecasts of the BNP Paribas bank's analytical team assume that CPI inflation will amount to an average of 10 percent annually. The growing uncertainty related to the war in Ukraine discourages both companies and consumers from investing. In addition, there are disruptions in foreign trade and rapidly rising raw materials that fuel inflation. The analysts of BNP Paribas bank forecast that approx. 10 percent of price increases may stay with us for longer, despite the cycle of interest rate increases.

"It will continue for the next three or six months, and higher interest rates are not conducive to investments," Michał Dybuła, the bank's chief economist, assessed.

(Newseria)