Poland's current-account deficit seen rising to 3% of GDP in 2007 - European Commission

Poland's current-account deficit is seen widening to 3.00% of GDP in 2007 and 4.25% next year, as rapid growth of domestic demand fuels import gains, the European Commission wrote in a report out Monday.

"After reaching 2.1% in 2006, the current account deficit is expected to widen to about 3% in 2007 and 4?% in 2008," the commission wrote in the report titled Spring 2007 Economic Forecast. "This deficit will continue to be largely financed by a stable inflow of foreign direct investments which in 2006 amounted to about PLN 43 bn (over 4% of GDP)."

Poland's economy continues to grow at a healthy clip with investments expected to rise 18% in 2007 and 14% next year. That will fuel imports of capital goods, with soaring wages contributing to increased purchases of imported consumer goods.
"Growing imports in line with strengthening domestic demand are projected to lead to an increase in the trade and current account deficits this year and next," the commission wrote. "The deficit in goods trade in 2007 is expected to almost double to 2.75% of GDP and deepen further to about 4% of GDP in 2008."

The rising imports of goods will be partly offset by a surplus in services, seen at 0.75% of GDP, and by rising handouts from Brussels coffers.

"[H]igher transfers from the EU will have a moderating impact on both the current and capital accounts," the commission wrote.
Source:gielda.wp.pl