Il Polish GDP in the first half of 2015 it maintained a good pace (3,5%), supported in particular by domestic demand. According to estimates published by the Intesa Sanpaolo Study Center, GDP grew by 3,4% in the third quarter (+0,9% compared to the same period of the previous year). The Economic Sentiment Indicator (ESI) continues to rise, confirming favorable economic prospects also for the first quarter of 2016. Hence, if a 3,5% GDP growth is estimated for the entire year just ended, the cyclical phase is expected to continue in 2016 as well (+3,5% in analysts' forecasts).
The fiscal consolidation achieved during the previous legislature allowed a reduction of the public deficit to 3,2% in 2014 and the exit from the excessive deficit procedure one year early. The public deficit should fall to 2,7% of GDP in 2015. However, foreign debt represents an element of the country's economic fragility, given that the current account deficit is expected to increase in the medium-long term. In this scenario, in January 2015 the IMF agreed to extend the Flexible Credit Line (FCL) program by two years for an amount of 23 billion dollars.
The low price of oil and the absence of inflationary pressures within the country are keeping the dynamics of prices subdued. At the beginning of November, the Board of the National Bank of Poland (NBP) left the policy rate at 1,5% (the lowest level ever). According to the monetary authorities, inflation will remain on a weak path during this year, but on the rise: further cuts in the policy rate are not excluded if the recovery in consumer prices is lower than expected. The zloty is currently at 4,2 against the euro, a value around which it has fluctuated in the last 12 months. It is therefore believed that the local currency will continue to be subject to some fluctuations in the short term, however reporting a slight depreciation in the longer term towards 4,37 against the euro.
If we offer a look at the Czech Republic, in 2015 the GDP, after a growth of 4,3% during the first half, maintained a trend dynamic of 4,5% in the third quarter. Support for growth was broadly based, involving all components of GDP, in particular domestic demand for final consumption and investments. Confidence indicators show that the economic situation remained favorable also towards the end of the year: the Economic Sentiment Indicator (ESI) rose in the months of October and November, while manufacturing GDP remained above the threshold of 50.
The public deficit rose to 2,0% in 2014 due to the simultaneous increase in public spending (to 42% of GDP) and the reduction in tax revenues (to 40,1%). For 2015, the public deficit was estimated at 2,0%, however the IMF forecasts forecast a correction to 1,3% in 2016. The public debt, equal to 42,6% of GDP in 2014, is estimated down to 41% this year and further slowing down for next year (to 40,5%).
In a context of limited dynamics in international energy and raw material prices, last year inflation was very low (0,3% on average from January to November). The EIU forecasts that inflation will gradually recover over the next year, to an average of 1,5%, with the consolidation of domestic demand; however, some downside risks related to the weak recovery in the prices of energy resources persist. In November, in a context of inflation expectations still low and below the target, the Czech National Bank (CNG) maintained the policy rate at 0,05%. The Cnb intends to avoid exchange rate appreciation and keep it close to 27 Czk against the euro.
The Fitch and S&P's agencies assign an A- rating to Poland, favorably evaluating its economic dynamics even in a difficult international context. A2 is the slightly more positive rating assigned by Moody's. In turn, the economic stability that the Czech Republic is showing is viewed very positively, with relatively low deficits, public debt and external debt. Fitch places the country in class A+; S&P assigns the Czech Republic an AA- rating; Moody's gives it an A1 rating.
