Senate approves nearly $61B of Ukraine foreign aid − here’s why it helps the US to keep funding Ukraine 
Sugar gums have a reputation as risky branch-droppers but they’re important to bees, parrots and possums 
How Anzac deaths changed the way we mourn to this day 
Impact investing in Paris suburban ‘banlieue’ neighbourhoods 
What if the Reserve Bank itself has been feeding inflation? An economist explains 
Industry shutdowns are messy and painful: 4 lessons Australia’s coal sector can learn from car-makers about bowing out 
The 50th anniversary of Portugal’s Carnation Revolution 
What kind of diner are you? 6 types of diners who avoid plant-based meat dishes 
Family farms are fast disappearing: our research shows how young generations can take them up successfully 
Food prices will climb everywhere as temperatures rise due to climate change – new research 
Japan Posts 7.7% Growth in Machinery Orders 
The idea that US interest rates will stay higher for longer is probably wrong 
Inflation is slowly falling, while student debt is climbing: 6 graphs that explain today’s CPI 
Half our colleagues suffer pain and discomfort from periods. But they’re still a taboo subject at work 
China’s new world order: looking for clues from Xi’s recent meetings with foreign leaders 
How breakdancing became the latest Olympic sport 
Poland's real economy disappoints significantly in 2016 and the downturn is likely to continue through 2017. Slump in private investment and weaker-than-expected household consumption are seen to be the main drivers behind the anaemic growth. In contradiction, policymakers claim that the pause in EU funds is the main reason for slowdown.
Poland's economic growth forecasts for 2016 were revised lower this week. Finance Minister Mateusz Morawiecki said the economy could grow by 2.5-3 percent this year, cutting a previous forecast of 3.4 percent.
"Latest data support our sub-consensus 2.4 percent growth forecast for 2016 and 2.7 percent for 2017. There is upside risk to our forecasts only in a scenario where the ECB manages to turn around the euro zone manufacturing cycle powerfully over the coming quarters" said Commerzbank in a report.
Poland's political risk perception remains fragile. The new PiS government holds a skeptical stance towards the EU and Russia and has signalled disinterest in adopting the euro. The rule of law probe has triggered a credit rating downgrade by S&P. There is also a looming risk of imposition of sanctions in worst case which could suspend Poland’s rights and privileges within EU or freeze EU funding.
Exports are no longer adding to growth and the helpful effect of falling energy prices have now run their course. Greater EU fund inflow is also likely to add only a mild pick-up in momentum in coming quarters. Deflation is likely to gradually fade in coming months, but is expected to remain well short of the central bank target through 2018. Below target inflation and disappointing growth is likely to keep National Bank of Poland (NBP) on an accommodative monetary stance.
"Direct rate cuts unlikely as a result of our less dovish view of the ECB. Rather, we think that a continued dovish stance from NBP, including perhaps Hungary-style QE policies, combined with a EM-negative environment globally will mean a weaker exchange rate – NBP will simply allow the FX channel to provide the additional stimulus," adds Commerzbank.
EUR/PLN was trading at 4.4903, while USD/PLN was at 4.2165 at 1230 GMT. At the said time, FxWirePro's Hourly USD Spot Index was at -30.4964 (Neutral) and EUR Spot Index was at 46.9312 (Neutral). For more details on FxWirePro's Currency Strength Index, visit http://www.fxwirepro.com/currencyindex.
