Poland Macro Weekly: Wartime interventionism

Wartime interventionism: The ongoing energy crisis will not bypass the Polish economy, which has entered the slowdown phase.
Second round effects: CPI inflation in September rose to 17.2% y/y and inflation became more sticky.

The state budget had a PLN 27.5 bn surplus in Jan-Aug 2022 vs 34.7 in Jan-Jul. In August there was PLN 7bn deficit due to the transfer of central bank profit (PLN 9.6 bn) to the off-budget Anti-Covid19 Fund. The cumulated (Jan-Aug) budget revenues are still by 7.8% y/y higher, despite energy and food VAT rate cuts. We continue to see no threat to the 2022 budget plan (PLN -29.9bn), as most of the cost of dealing with the crisis will be shifted to 2023.
The government is working on a windfall tax for large companies (250+ employees or €50mn+ in revenue). According to the preliminary proposal a 50% levy will be imposed on the product of the 2022 sales revenues and the difference in margins between 2022 and the average for 2018-19 and 2021. The government estimates the levy will bring PLN 13.5 bn new revenues.
S&P lowered its forecast for GDP growth in Poland to 4.0% (previously 4.5%) in 2022 and to 1.2% (previously 2.1%) in 2023. The agency raised its inflation forecasts to 13.3% in 2022 and 11.5% in 2023. Meanwhile EBRD assumes a 1.5% GDP growth in 2022 and 4% in 2023.
I.Duda and G.Maslowska have been proposed to the Sejm as candidates for the last two vacancies in MPC.
The Bank Guarantee Fund has started forced restructuring of Getin Noble Bank, which will be transferred to a joint BFG bank and the Commercial Bank Protection Scheme, established by 8 commercial banks.

NBP should finalize the cycle with a 25bp rate increase (to 7.0%) next week, however a definite announcement of its end is hardly likely, the MPC will rather declare that the future decisions will be fully data driven. Manufacturing PMI (Sep) will probably once again deteriorate, but we again underline, that it overstates the magnitude of declines in industry.