Poland Posts Reduced Trade Surplus
Trade has ceased to pick up in Poland according to data for May released this morning. The Balance of Trade surplus is now running at €200M, this is a contraction on the April figure of €420.13M and a reversal of the recent growth trend for Poland’s Balance of Payments. The country’s Current Account is also running a lower surplus in May, this now stands at €280 compared to the €1,028M recorded in April, expectations were for a figure of €522M for the month.
Poland is the largest of the former Eastern European economy to hold EU membership and is on track to join the Euro towards the end of 2016. Like many EU countries Poland is suffering from a stubbornly low rate of inflation, one that has fallen consistently over the past 12 months to the current level of 0.2%.
Despite the risks of deflation, Poland has one of the highest real interest rates of any EU member state. Although the current level of 2.5% is a record low for the Polish economy there is now pressure emerging for a further reduction in this rate. Until recently the Central Bank’s Monetary Policy Council had been providing forward guidance of no change in this rate, this guidance has now however been dropped and Poland looks on course for a rate cut. Consensus is building that this will take place no sooner than the end of the third quarter and most likely not until the beginning of 2015.
Poland’s own growth forecasts for the year are running at 3.7% this is an upward revision from 3.6% and comes despite recent disappointing GDP data for the earlier part of this year. A more realistic growth forecast however may provide some leeway for the Polish monetary authorities to provide monetary stimulus sooner than the planned timeline of early 2015.
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