Poland’s current account balance closed May with a small deficit of €63m. The goods trade deficit was €613m with exports down by 7.6% YoY and imports by 2.4% YoY, compared with growth of +6.5% YoY and +7.0% YoY respectively in April, with a more favorable calendar pattern. ING estimates that on a 12-month rolling basis the current account balance surplus remained at 1.8% of GDP.

May’s current account balance, in addition to the merchandise trade deficit, consisted of a high surplus in trade in services (€3163m), with deficits in primary income (€2094m) and secondary income (€519m).

Subdued foreign trade performance in May was consistent with a weakening in industrial production growth, influenced by the continued weakness in eurozone manufacturing (down 0.6% MoM in May on a seasonally adjusted basis, deepest in Germany -2.4% MoM and France -2.1% MoM).

The National Bank of Poland indicates YoY declines in May in all six main categories of goods exports, most strongly in transport equipment, particularly in products such as electric batteries, car parts, passenger cars, and trucks. The NBP points to a smaller decline in exports of intermediate goods than in previous months. Year-on-year declines were recorded in all six import categories, the smallest in fuels and consumer goods. Imports of passenger cars remained strong, as seen in domestic retail sales data.

According to ING, Poland continues to show external balance. As no reference is made to production increase, productivity, or entrepreneurship enhancements, expectations rely merely on the inflows of unlocked EU funds from the Recovery and Resilience Facility and the cohesion policy budget 2021-27.

Thus for 2024 as a whole, analysts expect a current account surplus of 0.8% of GDP due to the revival of domestic demand. No matter what, the thin air keeps blowing.