Factors of uncertainty for the economy and Bank Millennium Group
The summary list below presents the most important, in the Bank’s opinion, negative macroeconomic factors constituting risks for the economy and the Bank Millennium Group.
- Higher than expected growth in prices, which could result from inflation-wages spiral drive-up, worsening of relation between labour costs and productivity, increase of food and energy prices and continuing, longer than expected, supply difficulties in industry. In the face of inflation higher than projected inflationary expectations of households and companies could increase stronger, household purchasing power would deteriorate (thus increasing the level of credit risk), and demand growing slower would increase pressure on margins and financial performance of companies thereby hampering payment of liabilities and investment growth.
- Strong and fast tightening of monetary conditions resulting in decrease of demand for credit, deterioration of quality of the loans portfolio of BM Group as well as deterioration of valuation of the Group’s portfolio of Treasury securities.
- Rapid expansion of COVID-19 pandemic (e.g. vaccine-resistant mutations of the SARS-CoV-2 virus) and new anti-epidemic restrictions hampering demand growth in the economy and increasing credit risk exposure of the Group.
- Delay or lack of European Commission’s acceptance of the National Recovery Plan in result of increasing legal dispute between the Polish government and the European Union, which would lead to investments growth being slower than in the baseline scenario.
- Military activities between Russia and Ukraine significantly increasing the level of uncertainty on financial markets, which could result in parts of portfolio capital flowing out of Poland and worsening of outlook for companies having exposure to Eastern European markets.
Nevertheless, there is the likelihood of better economic performance in Poland, which could result i.a. from faster than assumed implementation of the National Recovery Plan, stronger than assumed impact of tax changes announced in the ‘Polish Deal’ programme, or faster elimination of gridlocks in supply chains. According to the Bank, the balance of risk factors for the GDP forecast is assessed to be slightly skewed to the downside while inflation expectations to the upside.