Page 12 - Poland Outlook 2024

appliances), which are characterised by high income elasticity of demand (demand for them changes significantly in response to changes in consumer income).
Although globally, demand for durable goods increased significantly during the pandemic (which may limit it now), such a situation did not occur in Poland, which in our opinion increases the likelihood of an increase in purchases in these categories of goods in the coming months.
The main risk to the optimistic forecast is a possible increase in the saving rate. Savings have been low recently and their increase could lead to a less pronounced recovery in consumer spending.
That said, “we do not assume that households’ propensity to save will increase significantly enough to prevent a clear rebound in consumption this year”, according to BNP Paribas.
The analysts also point to the systematically improving consumer confidence index, which suggests an increased purchasing activity among households, at least in the coming few months.
3.2 Banks
Fundamentally, there has been little change in the Polish banking sector of late and there are no expectations for major shifts in 2024. The financial stability in the Polish banking sector remains strong. Higher interest rates have boosted operating profitability at domestic banks and reinforced their ability to absorb higher costs.
In 2024, Polish banks are expected to push the new, apparently more pro-business government to revise or tweak tax and quasi-tax burdens with a view to reduce them to a level allowing “effective financing of investments of Poles and Polish companies”. Polish banks have long complained that their cost-to-income ratio places them at the bottom of the EU, with an average of 64% (in 2018-2022).
But in an increased interest rate environment, which soundly underpins operating profitability and provides a strong buffer to absorb extraordinary
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