Private consumption likely to drive Polish economic growth, NBP expected to stay on hold in 2017

Poland’s economic growth slowed a bit because the absorption of EU Structural Funds is not optimal, and investment is decelerating as a result. Therefore, the economy is expected to be driven by private consumption, owing to persisting fiscal stimuli and decently rising wages, noted KBC Market Research.

The National Bank of Poland’s official interest rates are expected to stay on hold throughout this year, even if the inflation is likely to rise this year. However, inflation is quite unlikely to reach the central bank’s target rate of 2.5 percent. But, market interest rates with longer maturities might be quite volatile in 2017, particularly if interest rates on important markets continue to rise, stated KBC Market Research.

Even if dollar market rates might keep the Polish zloty on the defensive, the eased monetary policy of the ECB might offset such pressure. Furthermore, Poland’s continuing upturn and the central bank’s very conservative monetary policy are fundamentally positive for the Polish zloty from the medium-term perspective.

“Of the Polish macroeconomic fundamentals that should not allow the zloty to weaken significantly, we should mention the very well developing balance of payments and growing FX reserves”, added KBC Market Research.

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