Poland: The end of an era – Rabobank

The Polish record long period of uninterrupted economic expansion since the collapse of communism is set come to an end this year due to a major demand and supply shock caused by the coronavirus, economists at Rabobank report. EUR/PLN trades at 4.5862.

Key quotes

“It would require a very optimistic assumption of economic activity coming back to normal relatively quickly, i.e. within next 2-3 months for Poland to avoid a recession. We expect a 2% contraction this year.”

“For the first time in its history the NBP will use unconventional tools to tackle the economic crisis. (...) We are far more concerned how investors will react if the NBP uses QE for longer than required.”

“EUR/PLN has entered a period of consolidation trading above the 4.50 level over the past few sessions. We prefer to be positioned for another leg higher in the coming weeks towards 4.80.”

“We anticipate EUR/PLN to peak between 4.80-5.00 in the first half of the year before retracing at least part of that move in H2.”