Poland’s economic outlook remains firm, growth likely to reach 3.5-4 pct in 2016

Polish economic outlook continues to be positive, according to KBC Market Research. The economy is likely to attract further support from policy measures of new government, apart from a weaker zloty and low interest rates. Hence, Poland’s economy mainly faces risks from a likely decline in external environment, particularly Russia, China and other emerging economies, noted KBC Market Research.

“For the whole year 2016 we expect GDP growth may reach 3.5 - 4.0 percent”, added KBC Market Research.

Meanwhile, the National Bank of Poland is likely to maintain its official rates; however, there is an increased risk of additional lowering of interest rate. This is primarily due to the stronger zloty, “inflows of cheap euros from the ECB” and current deflation.

Therefore, if the currency appreciates further, the NBP will have a leeway to loosen its monetary policy in Q2 2016. However, even as the currency will be supported by domestic fundamentals, emerging markets’ sentiments and the Fed or the ECB policy actions will mainly drive the zloty.