Compared to 2020, Poland’s current account balance is expected to deteriorate by an equivalent of around 4.5% of GDP in 2021.
Imports are inflated by higher energy bills and exports are limited by the global shortage of microprocessors.
Poland’s current account deficit amounted to €1.3 billion – just between our forecast of -€1.4 billion and the consensus of -€1.2 billion. This is explained by a deficit of 100 million euros in trade in goods and a surplus in services (of 1.8 billion euros), as well as deficits in primary incomes (2.7 billion euros) and secondary (300 million euros). Although the difference between the year-on-year growth rate of imports and exports remained the same (9 pps, with imports up 21.5% y-o-y and exports up 12.2% ), it narrowed by 4 pp compared to August.
Import bills were inflated by the continued recovery in domestic demand and high energy prices. At the same time, exports have been hampered by disruptions in global supply chains, which particularly affect Germany, Poland’s main trading partner.
According to the statement of the National Bank of Poland, the largest increase on the import side in September was oil and oil refining products and natural gas. In addition, more expensive raw materials have translated into a higher value of imported processed products, especially metals and chemicals. On the export side, the automotive sector suffered from semiconductor shortages. Exports of passenger cars and trucks fell, as did export sales of automotive batteries and catalysts.
A modest 12-month cumulative current account surplus is expected to turn into a deficit in the coming months.
According to our estimates, the current account balance, calculated on a 12-month cumulative basis, contracted to 0.4% of GDP against 0.9% in August, while the trade surplus contracted to 1.4 % of GDP against 1.7%. If the economic recovery and high energy prices continue in the fourth quarter, we can expect a continued deterioration of both balance sheets. We expect the merchandise trade balance to be close to zero for the whole of 2021, while the current account deficit will close to a deficit of around 1.5% of GDP. In 2020, the two balances show surpluses of 2.4% and 2.9% respectively.
The envisaged deterioration of Poland’s external balance indicators should be an important factor in future decisions of the Monetary Policy Council.
Leszek Kasek is Senior Economist for Poland at ING. This rating first appeared on ING THOUGHT gate here.
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