Macroeconomic Forecast Poland

October 2005 | Macroeconomic Forecasts

Despite the surprise election victory of the Law and Justice (PiS) party in parliamentary elections on September 25, and attendant fears over greater euroscepticism in a PiS-PO coalition government, the zloty has remained stable against the euro in the PLN3.89-3.90/EUR range. This suggests that political risks associated with the appointment of a centre-right administration are already included in the currency's valuation. Given the strong parliamentary majority that a PiS-PO executive would confer, and the prospect of an end to recent policy paralysis and pre-election fiscal relaxation, could see the currency appreciate to PLN3.85/EUR. However, over the forecast period, we expect slight zloty weakness against the euro, based on relative interest rate and inflation movements.

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