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Poland Improves Trade Balance

James Boston
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Poland Improves Trade Balance

The Polish economy is bracing itself for the impact of retaliatory Russian sanctions, particularly in the fresh food sector of which is one of Poland’s key eastward exports. The July trade figures released this morning however don’t encompass the full extend of the sanctions as they were introduced post this data. There is nonetheless a surplus still evident in the July numbers which show a positive Trade Balance of €393M, this is up somewhat on the June reading of €333M and easily outperforms the market expected figure of €303M. The Current Account announcement for July reveals a deficit of -€173M compared to June’s shortfall of -€391M, a widening to -€422M was the anticipated outcome for the month of July.

Poland has also reported up to date price growth data for the month of August. Year on year the inflation rate is continuing to fall with the latest reading coming in at –0.3%, this represents a further drop from July’s -0.2% when the Polish economy crossed the line into deflation, the market consensus for this reading was for -0.3%. The month on month inflation figure has also come in negative at –0.4%, this follows the July reading of -0.3% and compared to a market prediction for a -0.5% fall in August.

The sluggish overall growth experienced by Poland in 2012 and 2013 appears to have shrugged off as the revised Q2 GDP numbers for 2014 released last week suggest that the economy is performing better than previously thought. The Q2 number was upgraded to 3.3% annualized growth from the preliminary 3.2% announced earlier last month. The recovery in growth is partly being accredited to the Central Bank’s cutting of interest rates to 2.5%. Despite the growth pick up it now appears that a further cut could be on the cards given the weakness evident in price growth and as an insulation measure against further Russian sanctions.

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