KBC Market Research Desk
KBC Bank
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Polish leading indicator starts to decline
Ruling Civic Platform looses further in opinion polls
The Polish zloty remains the most volatile currency in the region. Yesterday, it moved back above the 4.13 EUR/PLN level - primarily due to weak Polish PMI figures. These also weighed on our leading indicator for Polish industry. For now, it is the only regional leading indicator that has turned around the corner and started to decline (see the graph below). It currently points to a slowdown in (industrial production) growth in a 3 month horizon. Although we still remain positive about the growth this year (3.6%), our Polish leading indicator signals that there are downside risks that the current healthy growth rate might not be sustainable. If it happens (which is not our base-line scenario yet) it will be a visible drawback for the zloty later this year.
Moreover, we are somewhat more concerned about an ongoing change in political landscape ahead of the crucial autumn Parliamentary elections. According to the latest public opinion polls, the ruling and market-friendly Civic Platform (PO) continues to lose support and it would currently end up on the third position.
Looking ahead, the highlight of this week should be the NBP meeting scheduled on Wednesday. The MPC should leave rates unchanged at an all-time low of 1.5%.Although inflation will remain below zero in the near future and will not climb into positive territory before late this year, Polish central bankers are satisfied with the economic growth and labour market improvements.
This non-exhaustive information is based on short-term forecasts for expected developments on the financial markets. KBC Bank cannot guarantee that these forecasts will materialize and cannot be held liable in any way for direct or consequential loss arising from any use of this document or its content. The document is not intended as personalized investment advice and does not constitute a recommendation to buy, sell or hold investments described herein. Although information has been obtained from and is based upon sources KBC believes to be reliable, KBC does not guarantee the accuracy of this information, which may be incomplete or condensed. All opinions and estimates constitute a KBC judgment as of the data of the report and are subject to change without notice.
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