Page 7 - Poland Outlook 2024

2.2 External environment
The weakish condition of the European economy is expected to weigh down on Polish exporters early in 2024. Still, as the economic situation in Europe appears likely to improve in the second half of the year, the volume of foreign sales may increase 1%-3% this year, BNP Paribas said in a forecast.
Export expansion has become the main driver of the Polish economy since joining the EU in 2004. At the same time, the import intensity of Polish exports remains at a relatively high but stable level. Poland is becoming an increasingly open economy, with the export-to-GDP ratio already exceeding 60%.
Despite growing openness, the share of Polish value added generated by foreign demand is lower than in other EU economies. The worsening trade balance in 2021/2022 and its rapid improvement in 2023 were largely due to a terms-of-trade shock. Economic revival, especially the expected investment boom, may complicate further improvement in the current account and overall external balance.
“We believe that with the revival of economic activity, including household consumption, net exports will start to deteriorate again. However, it should not be a strong enough factor to prevent the strengthening of the złoty in the next 6-12 months. We estimate that this year's current account deficit will be only 0.5% of GDP,” BNP Paribas said. That would be a strong reduction after the surplus of some 1.5% of GDP in 2023 (full data are not available yet).
“Such a high surplus results from very low domestic demand and high savings, especially by businesses. This is likely a transitional phenomenon,” Puls Biznesu wrote in an analysis.
“It also means that [Poland has] a relatively large safety cushion: when domestic demand revives, we should not experience a dangerously worsening current account balance,” it added.
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