Strong external demand likely to support Polish trade balance

Poland has maintained an upbeat trade balance in the last two years, owing to the mostly the outcome of the dropping oil prices. Net exports are likely to keep a smaller but still positive contribution to the economic growth.

In the first quarter of 2017, the net export contribution to the growth dropped to 0.1 percentage point from the contribution of 0.8 percentage point in fourth quarter of 2016. This is because of accelerating growth of imports and decelerating growth of exports.

Imports are likely to increase in the quarters ahead due to strengthening domestic demand. But the solid performance of German industry in the first half of the year is export-positive, noted Erste Group Research.

Overall, in spite of the strong domestic demand, the trade balance is unlikely to deteriorate to a greater degree because of strong external demand.