- The Polish current account surplus grew to EUR207m in May – mostly on the back of lower imports and an improvement in the income balance.
- Polish inflation inched down to 3.5% y/y in June from 3.6% y/y in May.
The Polish current account surplus grew to EUR207m in May, up from a surplus of EUR147m in April. This was better than the consensus expectation of a surplus of EUR45m and our forecast of EUR120m.
The improvement in the current account was driven more or less evenly by a drop in imports (of EUR259m) and improvement of the income balance (of EUR280m).
The sharp drop in imports (32.8% y/y) reflects a steep drop in domestic demand – and it indicates that the Polish economy is harder hit by the crisis than for example the GDP and private consumption numbers for Q1 indicate.
On the negative side it is notable that Polish exports actually dropped from April to May reflecting a still weak European economy.
Overall we look for a further improvement in the Polish current account situation in the coming months as we expect especially private consumption to weigh on domestic demand and thereby continue to constrain import growth, while the ongoing weakness in the zloty and the beginning signs of a recovery in European industry should help exports.
Today, we also got numbers for Polish inflation in June. Inflation dropped to 3.5% y/y in June down from 3.6% y/y in May – below the consensus expectation and our expectation of 3.6% y/y. The drop in inflation especially have to be seen in the light of the drop in food prices in inflation. Looking ahead we think that inflation will remain around 3½-4% for the rest of the year.
