Poland’s economic outlook continues to be positive. The Polish economic growth is likely to reach 3.5%-4% for the whole of 2016, said KBC Market Research in a research report. Lower interest rates, relatively weak zloty and policy measures of the new government are likely to underpin the economy. Policy measures from the new government might provide stimuli of private consumption. The Polish economy therefore faces headwinds mostly from a probable decline in external environment, particularly in Russia, China and other emerging nations, noted KBC Market Research.
Meanwhile, the National Bank of Poland is likely to keep the official rates on hold; however, risks of additional cuts have increased. This is due to the “inflow of cheap euros from the ECB”, stronger PLN and the ongoing deflation, said KBC Market Research. Therefore, the central bank might get a leeway to ease policy in Q2 2016 if the zloty gets stronger.
The PLN’s sell-off, related to fears of markets emerging from appointment of MPC’s new members, is over. However, even though the domestic fundamentals might support the currency, it will mainly be driven my emerging markets’ sentiment and the policy actions of the US Fed or the ECB, added KBC Market Research.
