Poland’s current account gap deepens on energy costs, primary income outflows
The desk assesses that Poland's current account deficit, which soared to €3.6 billion in August, signals a concerning trend driven by high energy costs and military spending. Per the full note , the widening trade deficit and a deterioration in the primary income balance appear to overshadow otherwise robust export growth, suggesting underlying vulnerabilities in Poland's external position. As the 12-month rolling deficit now reaches 1.3% of GDP, traders should be alert to implications for the PLN amid shifting external pressures. With no immediate events on the calendar, sentiment may continue to be influenced by these macroeconomic dynamics going forward.
What the desk is arguing
The desk sees the sharp widening of Poland's current account deficit as indicative of broader economic vulnerabilities. The €3.6 billion recorded in August significantly exceeded both expectations and deficits observed in prior months, reflecting a growing trade deficit linked to increased energy imports and military-related expenditures.
With energy costs soaring alongside a notable uptick in imports of AI-related technology and military equipment from the US and South Korea, the Polish economy is facing heightened external pressures. The deterioration in the primary income balance, now at -€3.8 billion, further complicates the outlook and poses potential risks to the stability of the PLN.
Where it sits in our coverage
Our consensus target for the EUR/PLN stands at 1.075 with a range between 1.04 and 1.12. Notable firm predictions include: - jpmorgan: 1.10 (Mar26) - bofa: 1.04 (Mar26)
This perspective aligns moderately with jpmorgan's more optimistic view but diverges from bofa's contrasting forecast that envisions a stronger PLN by March 2026.
How other firms see it
Group-aligned firms such as jpmorgan suggest a weakening PLN as the current account gap widens, while bofa presents a contrary stance favoring potential PLN strength. The interplay between the current account dynamics and interest rate policies from the National Bank of Poland may also affect the EUR/PLN trajectory moving forward, as shifts in monetary policy could either exacerbate or alleviate these external pressures.
How firms align with this view
Aligned with the desk view
Contrary positioning
Key takeaways
- 01Poland's current account deficit widened sharply to €3.6 billion in August, exceeding expectations.
- 02Increased energy imports and military spending are the main drivers behind the deficit expansion.
- 03The 12-month rolling deficit reached 1.3% of GDP, indicating rising economic vulnerability.
- 04Trader sentiment towards the PLN may remain cautious amid these external pressures.
Market implications
Watch for shifts in the EUR/PLN range as the market digests the implications of Poland's deteriorating current account balance. Current levels around 1.075 are key, and any further negative surprises in economic data could prompt volatility.
Risks to this view
A significant catalyst that could invalidate this outlook would be a sharp rebound in export performance or unexpected energy price stabilization, which could improve the current account balance and support the PLN more robustly.
Older quick take Quick take Published 15:04 Poland Poland’s current account gap deepens on energy costs, primary income outflows Poland’s current account deficit widened sharply in August, driven by a larger trade deficit and a deterioration in the primary income balance. Rising energy imports, AI-related purchases of computer equipment and likely military deliveries boosted imports, outweighing strong export growth Gdynia, Poland. Rising energy costs, AI-related tech and military deliveries boosted imports in August The widening of Poland’s current account deficit in August was driven by a larger goods trade deficit, resulting from higher imports of energy commodities, purchases of computer equipment for AI-related investment, and likely substantial deliveries of military equipment from South Korea (K2 tanks) and the United States (F-35A fighter aircraft).
In August, the current account balance recorded a deficit of €3.6bn (ING: -€2.1bn; consensus: -€2.4bn), deeper than in July (-€1.9bn) and a year earlier (-€2.7bn). On a 12-month rolling basis, the deficit reached 1.3% of GDP, compared with 1.2% after July. The trade deficit widened on the same measure to 1.5% of GDP, from 1.4% a month earlier.
The August current account deficit was made up of the following components: A goods trade deficit of €3.0bn, compared with -€1.4bn in July. The larger goods deficit occurred despite high trade turnover, which continued to grow at a double-digit pace, largely owing to higher prices in international trade. Growth in exports, measured in euro terms, accelerated to 13.2% year-on-year (from 11.1% in July), while import growth rose to 15.4% YoY (from 12.0% a month earlier); The traditionally positive services balance stood at €3.0bn, up from €2.8bn in July; A primary income deficit of -€3.8bn, compared with -€2.9bn a month earlier; and A surprisingly positive secondary income balance of €0.3bn, compared with -€0.3bn in July, supported by increased disbursements of EU funds to final beneficiaries.
According to National Bank of Poland analysts, alongside higher prices in international trade, purchases of computer equipment for artificial intelligence investment had a significant impact on trade turnover. On the export side, the strongest growth was recorded in computer equipment exports. Sales of aircraft engines, petroleum products and unwrought silver also saw strong increases.
The largest declines were seen in the automotive sector and furniture manufacturing. On the import side, strong growth was recorded in categories including computer equipment, computer parts and integrated electronic circuits. Imports of aircraft engines also increased.
Sources & References
How we cover this story